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Daily Price Cycles and Constant Margins: Recent Events in Canadian Gasoline Retailing

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  • Benjamin Atkinson
  • Andrew Eckert
  • Douglas S. West

Abstract

Retail gasoline pricing in Canada has typically followed certain distinct patterns, ranging from long durations of price rigidity relative to wholesale prices to daily price cycles. This paper examines recent changes to pricing patterns in Canadian cities resulting in new equilibrium behavior, and discusses possible reasons for these changes. Using high frequency retail price data obtained from GasBuddy.com, it is demonstrated that volatility changes exhibited in Toronto appear to correspond to an increased frequency of the price cycle, and replacement of the cycle with fixed retail margins. While multiple factors may have contributed to the first pricing change, the second change corresponds closely to a refinery fire in southern Ontario; this temporary event (in conjunction with a rail strike and refinery maintenance) could have triggered a permanent change in equilibrium behavior. This paper also illustrates problems for academic researchers and policymakers when using low frequency price data to analyze pricing in a market characterized by a price cycle.

Suggested Citation

  • Benjamin Atkinson & Andrew Eckert & Douglas S. West, 2014. "Daily Price Cycles and Constant Margins: Recent Events in Canadian Gasoline Retailing," The Energy Journal, , vol. 35(3), pages 47-70, July.
    • Handle: RePEc:sae:enejou:v:35:y:2014:i:3:p:47-70
    DOI: 10.5547/01956574.35.3.3
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    References listed on IDEAS

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    1. Robert Clark & Jean-Fran?ois Houde, 2013. "Collusion with Asymmetric Retailers: Evidence from a Gasoline Price-Fixing Case," American Economic Journal: Microeconomics, American Economic Association, vol. 5(3), pages 97-123, August.
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    1. Michael D. Noel & Hongjie Qiang, 2023. "Missing Price Information and Its Impact on Equilibrium Price Dispersion: Evidence From Gasoline Signboards," Journal of Industrial Economics, Wiley Blackwell, vol. 71(3), pages 814-854, September.

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