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

Author

Listed:
  • 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

Suggested Citation

  • Vladimir Kossov & Elena Kossova, 2013. "International dispersion of retail diesel fuel prices and the estimation of normal price values," HSE Working papers WP BRP 27/EC/2013, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:27/ec/2013
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    References listed on IDEAS

    as
    1. Eduardo, Ley & Jessica, Boccardo, 2009. "The Taxation of Motor Fuel: International Comparison," MPRA Paper 19461, University Library of Munich, Germany.
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    3. Axel Dreher & Tim Krieger, 2010. "Diesel price convergence and mineral oil taxation in Europe," Applied Economics, Taylor & Francis Journals, vol. 42(15), pages 1955-1961.
    4. Christopher Decker & Mark Wohar, 2007. "Determinants of state diesel fuel excise tax rates: the political economy of fuel taxation in the United States," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 171-188, March.
    5. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584.
    6. Kossov, Vladimir & Kossova, Elena, 2010. "Gasoline Price as Public Phenomena," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 149-166.
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    Cited by:

    1. V. V. Kossov, 2016. "The rationale for projected prices of demand on electricity for industry in Russia up to 2020," Studies on Russian Economic Development, Springer, vol. 27(1), pages 34-44, January.

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    More about this item

    Keywords

    budget revenue; diesel fuel price; motor fuel tax; mass protests; normal price; oil rent; price level;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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