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ASYMMETRIC DYNAMIC PRICING IN A LOCAL GASOLINE RETAIL MARKET -super-

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  • FELIPE BALMACEDA
  • PAULA SORUCO

Abstract

Asymmetric-price adjustment is a common phenomenon in many markets around the world, particularly in retail gasoline markets. This paper studies the existence of this phenomenon in the retail gasoline market in the city of Santiago, Chile, using a data set of weekly gas station prices that covers a period of almost four years. We found that prices adjust asymmetrically, and the asymmetry is different for branded gas stations and unbranded stations. In addition, we found that the asymmetry for high-margin stations is statistically equivalent to that for low-margin stations. This evidence is suggestive of collusion as a rationale for the asymmetric pricing policy observed. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

Suggested Citation

  • Felipe Balmaceda & Paula Soruco, 2008. "ASYMMETRIC DYNAMIC PRICING IN A LOCAL GASOLINE RETAIL MARKET -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 629-653, September.
  • Handle: RePEc:bla:jindec:v:56:y:2008:i:3:p:629-653
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    References listed on IDEAS

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    1. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    2. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Claudio Agostini, 2012. "Incidencia Tributaria en el Mercado de las Gasolinas en Chile," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 27(2), pages 55-73, October.
    2. Kristoufek, Ladislav & Lunackova, Petra, 2015. "Rockets and feathers meet Joseph: Reinvestigating the oil–gasoline asymmetry on the international markets," Energy Economics, Elsevier, vol. 49(C), pages 1-8.
    3. Joshua Sherman & Avi Weiss, 2015. "Price Response, Asymmetric Information and Competition," Economic Journal, Royal Economic Society, vol. 125(589), pages 2077-2115, December.
    4. Riemer P. Faber, 2015. "More New Evidence on Asymmetric Gasoline Price Responses," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    5. Obradovits, Martin, 2014. "Asymmetric Pricing Caused by Collusion," MPRA Paper 58889, University Library of Munich, Germany.
    6. Bruzikas, Tadas & Soetevent, Adriaan, 2014. "Detailed data and changes in market structure," Research Report 14027-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    7. Riemer P. Faber, 2009. "Asymmetric Price Responses of Gasoline Stations: Evidence for Heterogeneity of Retailers," Tinbergen Institute Discussion Papers 09-106/1, Tinbergen Institute.
    8. Tadas Bruzikas & Adriaan R. Soetevent, 2014. "Detailed Data and Changes in Market Structure: The Move to Unmanned Gasoline Service Stations," Tinbergen Institute Discussion Papers 14-123/VII, Tinbergen Institute.
    9. Pal, Debdatta & Mitra, Subrata K., 2016. "Asymmetric oil product pricing in India: Evidence from a multiple threshold nonlinear ARDL model," Economic Modelling, Elsevier, vol. 59(C), pages 314-328.
    10. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
    11. 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.
    12. Torrado, María & Escribano Sáez, Álvaro, 2017. "Nonlinear and asymmetric pricing behaviour in the Spanish gasoline market," UC3M Working papers. Economics 24984, Universidad Carlos III de Madrid. Departamento de Economía.

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