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The Effect of Not Listing Prices on Gasoline Purchases

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The gasoline service stations in Rochester, New York convinced the City Council to ban signs displaying gasoline prices. Why would they want to do this? What effect do you think this law had on gasoline prices? Why?

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Solution Summary

This solution discusses the factors consumers use when deciding to buy gasoline and what affect a concerted effort to hide those prices from consumers would have on their purchasing behavior.

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It has been proven in surveys that consumers are extremely price sensitive about gasoline. (See http://www.nacsonline.com/NACS/News/Campaigns/GasPrices_2009/Pages/ConsumersTopConcern.aspx.) This is no surprise; they can literally comparison shop as they travel down the streets. Removing the signs also removes the ability to ...

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