When consumers have heterogeneous access to information about prices, they face different observed price distributions and thus possibly different effective passthrough rates. We estimate a model of consumer search using data from the German retail fuel market. We find that informed consumers face higher effective passthrough rates, with important distributional implications for regulatory and tax policies. Lowering the VAT rate from 19% to 16% decreases transaction prices by 1.9% on average, but disproportionally benefits consumers in high-income markets.

We further show that a tax-revenue-equivalent excise tax reduction would have
benefited consumers more than a VAT cut, thus generalizing known results in public economics to markets with imperfect information.