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The gasoline Industry in European Union and the USA

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  • Polemis, Michail
  • Fotis, Panagiotis

Abstract

This paper explores whether asymmetric pricing can be identified in the eleven euro zone countries (Austria, Belgium, Finland, Greece, France, Germany, Ireland, Italy, Netherlands, Portugal and Spain) by utilizing Error Correction Model on the weekly price changes in order to assess current and future potential. The sample spans from July 1996 to August 2011. We also try to analyze the effect of competition on the dynamic adjustment of gasoline price to which has been paid scant attention in the past. The results favor the common perception that retail gasoline prices respond asymmetrically to cost increases and decreases both in the long and the short-run. At the wholesale segment, there is a symmetric response of the spot prices of gasoline towards the adjustment to the short-run responses of the exchange rate.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35097.

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Date of creation: 29 Nov 2011
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Handle: RePEc:pra:mprapa:35097

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Related research

Keywords: asymmetric pricing; euro zone countries; dynamic ordinary least squares; error correction model; unit root; Cointegration techniques; gasoline prices; competition; oil industry;

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References

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  15. Riemer P. Faber, 2009. "Asymmetric Price Responses of Gasoline Stations: Evidence for Heterogeneity of Retailers," Tinbergen Institute Discussion Papers 09-106/1, Tinbergen Institute.
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