Testing for Asymmetric Pricing Behaviour in Irish and UK Petrol and Diesel Markets
This paper empirically tests whether Irish and UK petrol and diesel markets are characterised by asymmetric pricing behaviour. The econometric assessment uses threshold autoregressive models and a dataset of monthly refined oil and retail prices covering the period 1997 to mid-2009. A methodological note is included on the importance of the specification of the number of possible regimes. In particular, the possibility of conflicting price pressures arising from short-run dynamics in retail prices and responses to disequilibrium errors needs to be explicitly modelled. For both the Irish and UK liquid fuel markets at national levels, the paper concludes that there is no evidence to support the “rockets and feathers” hypothesis that retail prices rise faster than they fall in response to changes in oil prices. It is still possible that a lack of competition at a more local level may accommodate asymmetric pricing behaviour.
|Date of creation:||Feb 2010|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box No. 559, Dame Street, Dublin 2|
Phone: (01) 671 6666
Fax: (01) 671 6561
Web page: http://www.centralbank.ie
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cbi:wpaper:3/rt/10. 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: (Richard Smith)
If references are entirely missing, you can add them using this form.