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Asymmetric search behavior for gasoline prices: Evidence from the Chinese gasoline market

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  • Xu, Jiayi
  • Zhang, Xiao-Bing
  • Liu, Yang

Abstract

With the rapid development of information and communication technologies (ICT), the consumers' search behavior to obtain more information plays an important role in analyzing the pricing strategies of firms. This paper investigates the consumers’ search behavior in the Chinese gasoline market, where the search intensity is represented by the Baidu index for gasoline price. Our results indicate the asymmetrical responses of search intensity to gasoline price changes, i.e., consumers search more when prices are rising than falling. When prices rise, searches are more intensive for cities with higher income or education. Moreover, search can lower the gasoline price dispersion, and this effect is greater under positive price changes. The asymmetric response in search to price changes could be one of the reasons for the asymmetry price adjustment to cost shocks in the retail market.

Suggested Citation

  • Xu, Jiayi & Zhang, Xiao-Bing & Liu, Yang, 2024. "Asymmetric search behavior for gasoline prices: Evidence from the Chinese gasoline market," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 699-712.
    • Handle: RePEc:eee:reveco:v:89:y:2024:i:pb:p:699-712
    DOI: 10.1016/j.iref.2023.10.029
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