https://www.cesifo.org/DocDL/cesifo1_wp8819.pdf
In the article “Price Effects of the Austrian Fuel Price-Fixing Act,” the author describes a synthetic control research that examined the price impacts of the Australian Fuel Price-Fixing Act (AFPFA) under the Supply Chain Management (SCM). With the common perception of the rising fuel prices in many countries, a political intervention was always thought to be the only solution to lower the overall price. However, after the keen observation, it is clear that despite the set standards and regulations to protect fuel price fluctuations, the change was quite unclear, forming the synthetic study's foundation. Researchers found out that the Australian fuel price intervention was mainly implemented to improve transparency rather than the common expectation of laterally lowering the prices (Becker et al., 2021). The article explains how building transparency has lowered fuel prices in Australia differently from most countries, which focus on regulating other factors like monopolizing the market and crude oil importation. The authors prove that many counterfactual claims in many countries have been mistaken with the causes of the sudden fluctuations.
The price of any product is dependent on how the demand and supply market components interact. When the demand for a product, say fuel, increases and the supply remains constants, to acquire the oil, buyers have to cue for the product, which gives the seller the monopoly power to increase the prices. Therefore, holding other factors constant, higher prices normally result from an increased demand in the market. Besides, the collusive attemps to monopolize the market give the lone seller the power to increase prices at his/her will since the buyers will have no alternative seller. The Sherman Act violation plays a crucial role in penalizing competitors who fix prices and rig bids due to increased demand. The occurrence of this act is made complicated when the market is monopolized.
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Reference
Becker, M., Pfeifer, G., & Schweikert, K. (2021). Price Effects of the Austrian Fuel Price-Fixing Act: A Synthetic Control Study. CESifo Working Paper. https://www.cesifo.org/DocDL/cesifo1_wp8819.pdf
