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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)

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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://129.3.20.41/eps/io/papers/0209/0209001.pdf
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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0209001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
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://129.3.20.41

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

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L - Industrial Organization

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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.
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  2. 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. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
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  4. 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. [Downloadable!]
  5. 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. [Downloadable!] (restricted)
  6. Asplund, Marcus & Eriksson, Rickard & Friberg, Richard, 2000. " Price Adjustments by a Gasoline Retail Chain," Scandinavian Journal of Economics, Blackwell Publishing, vol. 102(1), pages 101-21, March. [Downloadable!] (restricted)
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  7. 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. [Downloadable!]
  8. U, Peter Lee, 2000. "Competition Policy in the Philippine Downstream Oil Industry," Discussion Papers PASCN DP 2000-14, Philippine Institute for Development Studies. [Downloadable!]
  9. Borenstein, Severin & Cameron, A Colin & Gilbert, Richard, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 305-39, February.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bakytzhanova Zhuldyz, 2005. "Asymmetric fuel pricing in transition economies: The case of Moscow," EERC Working Paper Series 05-18e, EERC Research Network, Russia and CIS. [Downloadable!]
  2. Aldaba, Rafaelita Mercado, 2003. "Regulatory Policies and Reforms in the Power and Downstream Oil Industries," Discussion Papers DP 2003-16, Philippine Institute for Development Studies. [Downloadable!]
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