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Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market

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Author Info

  • John Michael Ian S. Salas

    (University of the Philippines School of Economics)

Abstract

This paper employs ordered probit, partial adjustment, and vector error correction models to characterize price adjustments in the Philippine retail gasoline market since its deregulation. It finds that pricing decisions of oil firms depend significantly on eight weeks of previous changes in crude cost. It shows that the speed of adjustment of retail prices to its long-run equilibrium relation with crude cost has been following an accelerating trend but is vulnerable to intervening factors. Lastly, it provides empirical evidence that pump prices respond quicker and more fully to increases in crude cost rather than to decreases.

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File URL: http://128.118.178.162/eps/io/papers/0209/0209001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0209001.

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Length: 44 pages
Date of creation: 12 Sep 2002
Date of revision:
Handle: RePEc:wpa:wuwpio:0209001

Note: Type of Document - pdf; pages: 44; figures: 11 figures, 18 tables. First Prize, Best Undergraduate Paper
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Web page: http://128.118.178.162

Related research

Keywords: gasoline; price asymmetry; price adjustment; Philippines;

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References

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  1. Godby, R. & Stengos, T. & Wandsschneider, B., 1997. "Testing for Asymmetric Pricing in the Canadian Retail Gasoline Market," Working Papers 1997-4, University of Guelph, Department of Economics and Finance.
  2. Meyer, Jochen & von Cramon-Taubadel, Stephan, 2002. "Asymmetric Price Transmission: A Survey," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24822, European Association of Agricultural Economists.
  3. Severin Borenstein & Andrea Shepard, 2002. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 116-139, Spring.
  4. Severin Boreinstein & Andrea Shepard, 1996. "Dynamic Pricing in Retail Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 429-451, Autumn.
  5. Asplund, Marcus & Eriksson, Rickard & Friberg, Richard, 2000. " Price Adjustments by a Gasoline Retail Chain," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 101-21, March.
  6. Stephen P. A. Brown & Mine K. Yücel, 2000. "Gasoline and crude oil prices: why the asymmetry?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q3, pages 23-29.
  7. Jeffrey D. Karrenbrock, 1991. "The behavior of retail gasoline prices: symmetric or not?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 19-29.
  8. Nathan S. Balke & Stephen P. A. Brown & Mine Yücel, 1998. "Crude oil and gasoline prices: an asymmetric relationship?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 2-11.
  9. Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
  10. Severin Borenstein & A. Colin Cameron, 1992. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," NBER Working Papers 4138, National Bureau of Economic Research, Inc.
  11. U, Peter Lee, 2000. "Competition Policy in the Philippine Downstream Oil Industry," Discussion Papers PASCN DP 2000-14, Philippine Institute for Development Studies.
  12. Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
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Citations

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Cited by:
  1. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.
  2. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
  3. Aldaba, Rafaelita M., 2003. "Regulatory Policies and Reforms in the Power and Downstream Oil Industries," Discussion Papers DP 2003-16, Philippine Institute for Development Studies.

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