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Testing Parallel Pricing Behavior in the Polish Wholesale Fuel Market: an ARDL – Bound Testing Approach

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  • Sylwester Bejger

    (Nicolaus Copernicus University)

Abstract

In this study, we investigated whether the observed series of fuel prices can be compatible with a specific theoretical model of strategic player interaction. Our primary interest is in determining whether a parallel pricing policy, implied by a theoretical model of strategic interactions, can be an industry-observed pricing mechanism. Therefore, we first calculated various descriptive statistics of the price series to discover any common patterns of individual series. Next, we determined whether parallel co-movement of the price levels exist using an ARDL – bound testing approach. This study finds that if we restricted our research to the described pricing mechanism (IPP pricing based on previous day fundamentals), the players will have chosen the levels of price in a parallel mode; this excludes 2007, when LOTOS appeared to be the price leader.Classification-JEL: L1, L7, C22

Suggested Citation

  • Sylwester Bejger, 2015. "Testing Parallel Pricing Behavior in the Polish Wholesale Fuel Market: an ARDL – Bound Testing Approach," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 15, pages 111-128.
    • Handle: RePEc:cpn:umkdem:v:15:y:2015:p:111-128
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    Cited by:

    1. Bejger Sylwester, 2016. "Theoretical Model of Pricing Behavior on the Polish Wholesale Fuel Market," Folia Oeconomica Stetinensia, Sciendo, vol. 16(1), pages 286-300, December.

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    More about this item

    Keywords

    wholesale fuel market; parallel pricing; cointegration;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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