This paper investigates the vertical relations in the Italian retail gasoline industry to study their effects on the retail price. The retailer, in presence of a quantity-decreasing unit discount scheme on the gasoline purchased, has to decide whether to follow the retail price recommended by his refiner (hence letting the latter implement an RPM) or to change it. We show that the retailer, under a regime of price liberalization, very often wants to charge a retail price higher than the recommended level (overpricing). Only by chance the retailer confirms the recommended price (i.e. RPM), while only in very special cases he sets a lower price (underpricing).
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