€2 Gas!

The paper presented in this ZEW Research Seminar explores the impact of competition on the pass-through of a tax holiday prompted by the 2022 energy crisis on consumer prices. Italian gas stations (treatment group) and German/Spanish counterparts (controls) are the focus. Stations with fewer competitors pass on only 65\% of the tax cut, compared to around 80\% for those with more competition. Less competitive stations also exhibit greater pass-through variability, consistent with sustainable competitive and collusive equilibria. When same-brand stations are neighbors, facilitating collusive behavior, pass-through decreases for stations facing fewer competitors, but not for those with more rivals.