Impact of Post and Hold Regulation on Retail Petroleum Prices

Abstract

This article uses data from Byrne and de Roos (2019) to understand the pricing behaviour of petrol stations under WA's post and hold policy. The article uses annual average pricing from 2008 to estimate demand parameters for petrol brands in WA. The estimated parameters are used to predict profit margins under the assumption that petrol stations were colluding. Analysis suggests that the observed profit margins of stations in WA between 2009 and 2012 are inconsistent with noncollusive pricing. The article asks whether similarities and differences between the WA policy and the proposed Victorian policy will lead to similar pricing behaviour.