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Understanding Gasoline Price Dispersion

Listed author(s):
  • Demet Yilmazkuday

    ()

    (Department of Economics, Florida International University)

  • Hakan Yilmazkuday

    ()

    (Department of Economics, Florida International University)

This paper models and estimates the gasoline price dispersion across time and space by using a unique data set at the gas-station level within the U.S.. Nationwide effects (measured by time fixed effects or crude oil prices) explain up to about 51% of the gasoline price dispersion across stations. Refinery-specific costs, which have been ignored in the literature due to using local data sets within the U.S., contribute up to another 33% to the price dispersion. While state taxes explain about 12% of the price dispersion, spatial factors such as local agglomeration externalities, land prices, distribution costs of gasoline explain up to about 4%. The contribution of brand-specific factors is relatively minor.

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File URL: http://economics.fiu.edu/research/working-papers/2016/1602/1602.pdf
File Function: First version, 2016
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Paper provided by Florida International University, Department of Economics in its series Working Papers with number 1602.

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Length: 48 pages
Date of creation: Jun 2016
Handle: RePEc:fiu:wpaper:1602
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Web page: http://economics.fiu.edu

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