IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v49y2016i2p772-788.html

Rockets and feathers meet markup margins: Applications to the oil and gasoline industry

Author

Listed:
  • Janelle Mann

Abstract

This article investigates the existence of asymmetric price transmission between crude oil, rack (wholesale) and retail gasoline prices. A threshold cointegration technique is used, with regime switches being triggered by the size of the markup margin. There is consistent evidence of band-TAR in which the crude, rack and retail prices are free to diverge until the markup margin is squeezed or stretched beyond a lower or upper critical threshold. This finding indicates that abnormally high markup margins cannot be sustained, which provides evidence against market power exertion. The threshold error correction models indicate that there is no systematic relationship between the speed of adjustment back to the long-run relationship and the markup margin, which rules out the existence of rockets and feathers.

Suggested Citation

  • Janelle Mann, 2016. "Rockets and feathers meet markup margins: Applications to the oil and gasoline industry," Canadian Journal of Economics, Canadian Economics Association, vol. 49(2), pages 772-788, May.
    • Handle: RePEc:cje:issued:v:49:y:2016:i:2:p:772-788
    DOI: 10.1111/caje.12213
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/caje.12213
    Download Restriction: access restricted to subscribers
    File URL: https://libkey.io/10.1111/caje.12213?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. George Deltas & Michael Polemis, 2024. "Price Pass-Through Dependence on the Source of Cost Increases: Evidence from the European Gasoline Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(2), pages 595-626, September.
    2. Chen, Chaoyi & Polemis, Michael & Stengos, Thanasis, 2018. "On the Examination of Competition in the Petroleum Industry: A Pooled Panel Threshold Analysis," MPRA Paper 89671, University Library of Munich, Germany.
    3. Chad Lawley & Vincent Thivierge, 2018. "Refining the Evidence: British Columbia’s Carbon Tax and Household Gasoline Consumption," The Energy Journal, , vol. 39(2), pages 147-172, March.
    4. María Torrado & Álvaro Escribano, 2020. "European gasoline markets: price transmission asymmetries in mean and variance," Applied Economics, Taylor & Francis Journals, vol. 52(42), pages 4621-4638, September.
    5. Chen, Chaoyi & Polemis, Michael & Stengos, Thanasis, 2019. "Can exchange rate pass-through explain the asymmetric gasoline puzzle? Evidence from a pooled panel threshold analysis of the EU," Energy Economics, Elsevier, vol. 81(C), pages 1-12.

    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:49:y:2016:i:2:p:772-788. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.