Theoretical Model of Pricing Behavior on the Polish Wholesale Fuel Market

Abstract

In this paper, we constructed a theoretical model of strategic pricing behavior of the players in a Polish wholesale fuel market. This model is consistent with the characteristics of the industry, the wholesale market, and the players. The model is based on the standard methodology of repeated games with a built-in adjustment to a focal price, which resembles the Import Parity Pricing (IPP) mechanism. From the equilibrium of the game, we conclude that the focal price policy implies a parallel pricing strategic behavior on the market.

Keywords

• wholesale fuel market
• strategic behavior
• focal pricing game
• parallel pricing
• d43
• l1
• c72
• c57