What affects intranational price dispersion?: The case of Japanese gasoline prices
AbstractThe empirical analysis on price dispersion, as described by [Engel, C., Rogers, J.H., 1996. How wide is the Border? American Economic Review 86, 1112-1125], is to investigate the determinants of international relative price fluctuations. Using data from the Japanese gasoline industry, we investigate the implications of the market structure for intranational price dispersion. Our empirical results suggest that: (1) in conformity with the double marginalization model, the dispersion of the wholesale gasoline price is affected by the relative retailer's margin and (2) the dispersion of the retail gasoline margin is influenced by the degree of competition and advertising. Considering these results synthetically, the retail price dispersion is amplified by the retail market structure both directly and indirectly.
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Bibliographic InfoArticle provided by Elsevier in its journal Japan and the World Economy.
Volume (Year): 20 (2008)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/505557
Law of one price Price dispersion Double marginalization Market structure;
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