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The dynamics of daily retail gasoline prices

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  • Michael C. Davis

    (University of Missouri-Rolla, MO, USA)

Abstract

Previous research has analyzed the behavior of retail gasoline stations in how they adjust their prices. In this paper we analyze the daily movements in prices of four retail gasoline stations located in Newburgh, New York. We find some evidence to support the notion that the behavior is explained by menu costs. There is substantial evidence that the firms adjust their prices asymmetrically, being more inclined to increase than to decrease prices. We conclude that the pricing behavior is being determined by a combination of search costs for the consumers and menu costs for the producers. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1372
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 28 (2007)
Issue (Month): 7 ()
Pages: 713-722

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Handle: RePEc:wly:mgtdec:v:28:y:2007:i:7:p:713-722

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Severin Borenstein & Andrea Shepard, 1996. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," Working Papers, University of California at Berkeley, Haas School of Business _001, University of California at Berkeley, Haas School of Business.
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Cited by:
  1. Gautier, E. & Le Saout, R., 2012. "The Dynamics of Gasoline Prices: Evidence from Daily French Micro Data," Working papers, Banque de France 375, Banque de France.
  2. N. Gregory Mankiw & Ricardo Reis, 2001. "Sticky information versus sticky prices: a proposal to replace the New-Keynesian Phillips curve," Proceedings, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, issue Jun.
  3. Craigwell, Roland & Moore, Winston & Worrell, DeLisle, 2011. "Does Consumer Price Rigidity Exist in Barbados?," MPRA Paper 40928, University Library of Munich, Germany.
  4. Diego Escobari, 2013. "Asymmetric Price Adjustments in Airlines," Managerial and Decision Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 34(2), pages 74-85, 03.
  5. Christopher Douglas & Ana Mar�a Herrera, 2010. "Why are gasoline prices sticky? A test of alternative models of price adjustment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 25(6), pages 903-928.
  6. Daniel Levy, 2006. "Price Rigidity and Flexibility: New Empirical Evidence," Emory Economics, Department of Economics, Emory University (Atlanta) 0611, Department of Economics, Emory University (Atlanta).
  7. Douglas, Christopher C. & Herrera, Ana María, 2014. "Dynamic pricing and asymmetries in retail gasoline markets: What can they tell us about price stickiness?," Economics Letters, Elsevier, Elsevier, vol. 122(2), pages 247-252.
  8. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.

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