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α: calibrated so average coauthorship-adjusted count equals average raw count
This paper studies the price uniformity in the Chinese gasoline market, using station-level data of Hohhot city, Inner Mongolia. We first document that the mode prices of the gasoline stations are consistent with the price ceilings set by the government, implying that the price ceiling regulation in the Chinese gasoline market may serve as a focal point for the gasoline stations to reach price uniformity. We corroborate the focal point hypothesis by providing evidence showing that some stations would “jump” to the ceilings as their prices approach the ceilings. Also, we find that local market structure, distance between stations, station capacity, market characteristics, and past pricing behavior could affect the probability of gas stations to price at the ceilings. Moreover, a higher price ceiling would reduce the probability that stations reach price uniformity. Our results provide another piece of evidence to the literature regarding the unintended effect of price ceiling regulation.