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Price Regulations and Price Adjustment Dynamics: Evidence from the Austrian Retail Fuel Market

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  • Evanthia Fasoula
  • Karsten Schweikert

Abstract

This paper investigates fuel price regulations implemented in Austria prohibiting retailers from raising their prices more than once per day. We analyse price transmission dynamics over three subsamples and find evidence for asymmetric adjustment in the post-regulation period. Considering the combined effect of input price changes reveals that gasoline now passes through input price changes faster in the post-regulation period. We do not obtain the same finding for diesel, where only input price increases are transmitted significantly faster. We conclude that the Austrian fuel price regulation seems to have been a partial success in terms of efficiency in price transmission.

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  • Evanthia Fasoula & Karsten Schweikert, 2020. "Price Regulations and Price Adjustment Dynamics: Evidence from the Austrian Retail Fuel Market," Journal of Transport Economics and Policy, University of Bath, vol. 54(1), pages 21-2-39.
    • Handle: RePEc:tpe:jtecpo:2020:54:1:21--39
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