We study the retail price pass-through of four major tax changes in petroleum products using daily pricing data from gas stations on small Greek islands. We find that (i) the pass-through of the tax hikes is five times higher than for the tax decrease, (ii) the pass-through of the tax hikes increases with competition, while that of the tax decrease does not, (iii) there is significant asymmetry in the speed of price adjustments, and (iv) the asymmetric price adjustment can be rationalized by either tacit collusion or consumer search behavior, as the most plausible explanations.

Christos Genakos, Yuan Lyu and Mario Pagliero

22 July 2026

Journal of Industrial Economics 2026

DOI: 10.1111/joie.70036

https://onlinelibrary.wiley.com/doi/10.1111/joie.70036

This work is published under POID and the CEP's Growth programme.