What do you believe is the single most important factor driving up the cost of living in Nigeria?

Households in low-income areas face significantly higher increases in petrol prices when rival fuel stations close compared to high-income areas, according to new research led by the University of East Anglia (UEA).

At the same time, low-income areas do not benefit from a higher drop in prices when new stations open.

The study is published today in the Journal of Industrial Economics. It shows that it matters who operates the petrol stations: large chains respond with higher price increases following the exit of one of their rivals.

Other factors, such as reliance on cars, commuting distance, age, or education also drive some of these findings, but even after accounting for these, the difference between low and high-income households remains.

Lead author Peter Ormosi, Professor of Competition Economics at UEA's Norwich Business School, said, "This difference is striking as it implies that increasing market concentration, or market power, is likely to have a more negative impact on low-income people.

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