Gasoline and crude oil prices: why the asymmetry?
Many consumers complain that gasoline and crude oil prices have an asymmetric relationship in which gasoline prices raise more quickly when crude oil prices are rising than they fall when crude oil prices are falling. Many also regard the asymmetry they observe as evidence of market power in the petroleum industry. Most previous research provides econometric evidence of the asymmetry, confirming at least part of what consumers suspect. In this article Stephen Brown and Mine Yucel extend the inquiry by examining the market conditions underlying the asymmetric relationship between gasoline and crude oil prices. They find the observed asymmetry is unlikely to be the result of monopoly power. The remaining explanations for the asymmetry suggest that policies to prevent an asymmetric relationship between gasoline and crude oil prices are likely to reduce economic efficiency.
Volume (Year): (2000)
Issue (Month): Q3 ()
|Contact details of provider:|| Web page: http://www.dallasfed.org/Email: |
More information through EDIRC
|Order Information:|| Email: |
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.:
- 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.
- Severin Borenstein & Andrea Shepard, 1993. "Dynamic Pricing in Retail Gasoline Markets," NBER Working Papers 4489, National Bureau of Economic Research, Inc.
- Borenstein, S. & Shepard, A., 1993. "Dynamic Pricing in Retail Gazoline Markets," Papers 93-22, California Davis - Institute of Governmental Affairs.
- Neumark, David & Sharpe, Steven A, 1992.
"Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits,"
The Quarterly Journal of Economics,
MIT Press, vol. 107(2), pages 657-80, May.
- David Neumark & Steven A. Sharpe, 1989. "Market structure and the nature of price rigidity: evidence from the market for consumer deposits," Finance and Economics Discussion Series 52, Board of Governors of the Federal Reserve System (U.S.).
- 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.
- 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.
- John Haltiwanger & Joseph E. Harrington Jr., 1991. "The Impact of Cyclical Demand Movements on Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 89-106, Spring.
- Sam Peltzman, 1998.
"Prices Rise Faster Than They Fall,"
University of Chicago - George G. Stigler Center for Study of Economy and State
142, Chicago - Center for Study of Economy and State.
- Reagan, Patricia B. & Weitzman, Martin L., 1982. "Asymmetries in price and quantity adjustments by the competitive firm," Journal of Economic Theory, Elsevier, vol. 27(2), pages 410-420, August.
- Severin Borenstein, 1991. "Selling Costs and Switching Costs: Explaining Retail Gasoline Margins," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 354-369, Autumn.
- 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.
- Reagan, Patricia B, 1982. "Inventory and Price Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 137-42, January.
- Samarendu Mohanty & E. Wesley F. Peterson & Nancy Cottrell Kruse, 1995. "Price Asymmetry in the International Wheat Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 355-366, November.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:fip:fedder:y:2000:i:q3:p:23-29. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Delia Rodriguez)The email address of this maintainer does not seem to be valid anymore. Please ask Delia Rodriguez to update the entry or send us the correct address
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.