Competition, regulation, and pricing behaviour in the Spanish retail gasoline market
AbstractThe restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990, the Spanish government introduced a system of ceiling price regulation in order to ensure that "liberalization" was accompanied by adequate consumer protection. By 1998, prices were left to the "free" market. This paper examines the pricing behaviour of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases as well as to decreases in the spot price of gasoline both over the period of price regulation (January 1993-September 1998) and over the period of free market (October 1998-December 2004). However, once the ceiling price regulation was abolished, cooperation emerged between the government and the major operators, Repsol-YPF and Cepsa-Elf, to control the inflation rate. This resulted in a slower rate of adjustment of gasoline retail prices when gasoline spot prices went up, as compared with the European pattern. Finally, the Spanish retail margin was by the end of our timing period of analysis, as in the starting years after the abolishment of the state monopoly, above the European average. This pattern confirms our political economic hypothesis, which suggests that the Spanish government and the oil companies were working together in reducing the inflation, in periods of rising oil and gasoline prices. It is also inferred that explaining the pricing pattern in energy markets may require different hypothesis than the classical perspective, involving just firms taking advantage of market power.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Energy Policy.
Volume (Year): 37 (2009)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/enpol
Competition Regulation Spanish gasoline market;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Matteo Manera & Margherita Grasso, 2005.
"Asymmetric Error Correction Models for the Oil-Gasoline Price Relationship,"
2005.75, Fondazione Eni Enrico Mattei.
- Grasso, Margherita & Manera, Matteo, 2007. "Asymmetric error correction models for the oil-gasoline price relationship," Energy Policy, Elsevier, vol. 35(1), pages 156-177, January.
- Godby, R. & Stengos, T. & Wandsschneider, B., 1997.
"Testing for Asymmetric Pricing in the Canadian Retail Gasoline Market,"
1997-4, University of Guelph, Department of Economics and Finance.
- Godby, Rob & Lintner, Anastasia M. & Stengos, Thanasis & Wandschneider, Bo, 2000. "Testing for asymmetric pricing in the Canadian retail gasoline market," Energy Economics, Elsevier, vol. 22(3), pages 349-368, June.
- Ronald Johnson, 2002. "Search Costs, Lags and Prices at the Pump," Review of Industrial Organization, Springer, vol. 20(1), pages 33-50, February.
- Severin Borenstein & Andrea Shepard, 2002.
"Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets,"
RAND Journal of Economics,
The RAND Corporation, vol. 33(1), pages 116-139, Spring.
- Severin Borenstein & Andrea Shepard, 1996. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," NBER Working Papers 5468, National Bureau of Economic Research, Inc.
- Severin Borenstein & Andrea Shepard, 1996. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," Working Papers _001, University of California at Berkeley, Haas School of Business.
- Granger, C W J & Lee, T H, 1989. "Investigation of Production, Sales and Inventory Relationships Using Multicointegration and Non-symmetric Error Correction Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S145-59, Supplemen.
- Ignacio Contin & Aad Correlje & Emilio Huerta, 1999. "The Spanish Gasoline Market: From Ceiling Regulation to Open Market Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-14.
- MacKinnon, James G, 1996.
"Numerical Distribution Functions for Unit Root and Cointegration Tests,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 11(6), pages 601-18, Nov.-Dec..
- James G. MacKinnon, 1995. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Working Papers 918, Queen's University, Department of Economics.
- Bettendorf, Leon & van der Geest, Stephanie A. & Varkevisser, Marco, 2003. "Price asymmetry in the Dutch retail gasoline market," Energy Economics, Elsevier, vol. 25(6), pages 669-689, November.
- Kaufmann, Robert K. & Laskowski, Cheryl, 2005. "Causes for an asymmetric relation between the price of crude oil and refined petroleum products," Energy Policy, Elsevier, vol. 33(12), pages 1587-1596, August.
- Lance J. Bachmeier & James M. Griffin, 2003. "New Evidence on Asymmetric Gasoline Price Responses," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 772-776, August.
- Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
- Severin Borenstein & A. Colin Cameron, 1992.
"Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?,"
NBER Working Papers
4138, National Bureau of Economic Research, Inc.
- Borenstein, Severin & Cameron, A Colin & Gilbert, Richard, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 305-39, February.
- James H. Stock & Mark W. Watson, 1991.
"A simple estimator of cointegrating vectors in higher order integrated systems,"
Working Paper Series, Macroeconomic Issues
91-3, Federal Reserve Bank of Chicago.
- Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
- Bello, Alejandro & Cavero, Sandra, 2008. "The Spanish retail petroleum market: New patterns of competition since the liberalization of the industry," Energy Policy, Elsevier, vol. 36(2), pages 612-626, February.
- Barry Reilly & Robert Witt, 1996.
"Petrol Price Asymmetries Revisited,"
Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS)
89, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
- Kirchgassner, Gebhard & Kubler, Knut, 1992. "Symmetric or asymmetric price adjustments in the oil market : An empirical analysis of the relations between international and domestic prices in the Federal Republic of Germany, 1972-1989," Energy Economics, Elsevier, vol. 14(3), pages 171-185, July.
- Andrew Eckert, 2002. "Retail price cycles and response asymmetry," Canadian Journal of Economics, Canadian Economics Association, vol. 35(1), pages 52-77, February.
- Nathan S. Balke & Stephen P. A. Brown & Mine Yücel, 1998. "Crude oil and gasoline prices: an asymmetric relationship?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 2-11.
- Galeotti, Marzio & Lanza, Alessandro & Manera, Matteo, 2003.
"Rockets and feathers revisited: an international comparison on European gasoline markets,"
Elsevier, vol. 25(2), pages 175-190, March.
- M. Galeotti & A. Lanza & M. Manera, 2001. "Rockets and feathers revisited: an international comparison on European gasoline markets," Working Paper CRENoS 200112, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
- Balaguer, Jacint & Ripollés, Jordi, 2012. "Testing for price response asymmetries in the Spanish fuel market. New evidence from daily data," Energy Economics, Elsevier, vol. 34(6), pages 2066-2071.
- Perdiguero García, Jordi, 2010. "Dynamic pricing in the spanish gasoline market: A tacit collusion equilibrium," Energy Policy, Elsevier, vol. 38(4), pages 1931-1937, April.
- Balaguer, Jacint & Ripollés, Jordi, 2013. "Asymmetric fuel price responses under heterogeneity," MPRA Paper 52481, University Library of Munich, Germany.
- Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.