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Taxation and the asymmetric adjustment of selected retail energy prices in the UK

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  • Greenwood-Nimmo, Matthew
  • Shin, Yongcheol

Abstract

This paper investigates the adjustment of the prices of four key petroleum products in the UK following changes in the price of crude oil. We find significant evidence that the pre-tax prices of diesel, kerosene, and gas oil adjust more rapidly in an upward than a downward direction, but that the pre-tax price of unleaded petrol adjusts symmetrically. However, these patterns are obscured at the pump once one accounts for fuel duty and value-added tax, raising the possibility that firms can use the tax system to conceal rent-seeking behaviour.

Suggested Citation

  • Greenwood-Nimmo, Matthew & Shin, Yongcheol, 2013. "Taxation and the asymmetric adjustment of selected retail energy prices in the UK," Economics Letters, Elsevier, vol. 121(3), pages 411-416.
    • Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:411-416
    DOI: 10.1016/j.econlet.2013.09.020
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    References listed on IDEAS

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    More about this item

    Keywords

    Nonlinear ARDL (NARDL); Asymmetric gasoline price adjustment; Rockets and feathers hypothesis;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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