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International dispersion of retail diesel fuel prices and the estimation of normal price values

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Author Info

  • Vladimir Kossov

    ()
    (Research University Higher School of Economics , professor)

  • Elena Kossova

    ()
    (Research University Higher School of Economics, Ph.D. in mathematics, lecturer)

Abstract

For the large majority of goods, the price dispersion between countries does not exceed 1:10. Diesel fuel stands out, with a dispersion which exceeds 1:100. Given a constant oil price the difference in diesel fuel prices between countries is caused by the different taxes. The average share of taxes in the price determines the normal price. An estimation of the normal price of diesel fuel is made using an econometric model (using 79 countries, 1998-2008 by even years). Of greatest interest to economic policy are normal prices for countries with economies in transition and developing countries. This paper is organized as follows. In the introduction a definition of the term "normal price" and why it is important are presented. The first chapter is devoted to the notion of "price level" both international and national. The normal price is calculated using an econometric model. The estimation of the normal price of goods is determined by the international component and deviation of the normal price by the national one. In the second chapter the results of evaluating the parameters of the econometric model and the values of normal prices are given. In the third chapter price deviations in Russia and Kazakhstan are discussed and it is concluded that they have reached the maximum value, above which mass protests may result

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Bibliographic Info

Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 27/EC/2013.

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Length: 55 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, March 2013, pages 1-55
Handle: RePEc:hig:wpaper:27/ec/2013

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Keywords: budget revenue; diesel fuel price; motor fuel tax; mass protests; normal price; oil rent; price level;

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  1. Henrik Hammar, Asa Lofgren and Thomas Sterner, 2004. "Political Economy Obstacles to Fuel Taxation," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
  2. Rietveld, Piet & van Woudenberg, Stefan, 2005. "Why fuel prices differ," Energy Economics, Elsevier, Elsevier, vol. 27(1), pages 79-92, January.
  3. Kossov, Vladimir & Kossova, Elena, 2013. "Gasoline price as social phenomenon," MPRA Paper 48720, University Library of Munich, Germany.
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