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Rockets and Feathers Revisited: Asymmetric Retail Gasoline Pricing in the Era of Market Transparency

Author

Listed:
  • Emmanuel Asane-Otoo
  • Bernhard C. Dannemann

Abstract

In this paper, we revisit the empirical observation that prices rise like rockets when input costs increase but fall like feathers when input costs decrease. The analysis draws on a novel data set that includes daily retail prices of gasoline from 12,804 stations in Germany from January 1, 2014 to December 31, 2018. Our findings based on pooled-panel asymmetric error correction models indicate that the pattern of rockets and feathers is the norm rather than the exception. Our results further show that temporal aggregation of station-level price data leads to inaccurate inferences and could account for the inconclusive findings in the literature.

Suggested Citation

  • Emmanuel Asane-Otoo & Bernhard C. Dannemann, 2022. "Rockets and Feathers Revisited: Asymmetric Retail Gasoline Pricing in the Era of Market Transparency," The Energy Journal, , vol. 43(6), pages 103-122, November.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:6:p:103-122
    DOI: 10.5547/01956574.43.6.easa
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    References listed on IDEAS

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    Cited by:

    1. Kahl, Mats Petter, 2024. "Cross-border competition in the gasoline retail market: Impact of proximity at the German-Polish border," Energy Economics, Elsevier, vol. 140(C).
    2. Wen, Danyan & He, Mengxi & Wang, Yudong & Zhang, Yaojie, 2025. "Forecasting gasoline prices using oil prices: New evidence based on the rocket and feather hypothesis," Energy, Elsevier, vol. 335(C).
    3. Balaguer, Jacint & Ripollés, Jordi, 2024. "Assessing a fuel subsidy: Dynamic effects on retailer pricing and pass-through to consumers," Energy Economics, Elsevier, vol. 138(C).
    4. Manuel Hidalgo Pérez & Natalia Collado & Ángel Martínez Jorge, 2025. "Heterogeneous and dynamic pass-through of a fuel subsidy to consumers: Evidence from Spain," Working Papers 25.01, Universidad Pablo de Olavide, Department of Economics.

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