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Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets Author info | Abstract | Publisher info | Download info | Related research | Statistics Severin Borenstein
Andrea Shepard
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A model with costly adjustment of production and costly inventories implies that wholesale gasoline prices will respond with a lag to crude oil cost shocks. Unlike explanations that rely upon menu costs, imperfect information, or long-term buyer/seller relationships, this model predicts that futures prices for gasoline will adjust incompletely to crude oil price shocks that occur close to the expiration date of the futures contract. We test and confirm this implication. Examining wholesale price responses in 188 gasoline markets, we also find that firms with market power adjust prices more slowly than do competitive firms, consistent with the model.
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Article provided by The RAND Corporation in its journal RAND Journal of Economics .
Volume (Year): 33 (2002)
Issue (Month): 1 (Spring)
Pages: 116-139
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Handle: RePEc:rje:randje:v:33:y:2002:i:spring:p:116-139Contact details of provider: Web page: http://www.rje.org
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Paper 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.
[Downloadable!] 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.
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references Cited by : (explanations , 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.)
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Other versions: Du, Xiaodong & Hayes, Dermot J., 2008.
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Du, Xiaodong & Hayes, Dermot J., 2008.
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