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Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market

Author

Listed:
  • John Michael Ian S. Salas

    (University of the Philippines School of Economics)

Abstract

This paper employs ordered probit, partial adjustment, and vector error correction models to characterize price adjustments in the Philippine retail gasoline market since its deregulation. It finds that pricing decisions of oil firms depend significantly on eight weeks of previous changes in crude cost. It shows that the speed of adjustment of retail prices to its long-run equilibrium relation with crude cost has been following an accelerating trend but is vulnerable to intervening factors. Lastly, it provides empirical evidence that pump prices respond quicker and more fully to increases in crude cost rather than to decreases.

Suggested Citation

  • John Michael Ian S. Salas, 2002. "Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market," Industrial Organization 0209001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0209001
    Note: Type of Document - pdf; pages: 44; figures: 11 figures, 18 tables. First Prize, Best Undergraduate Paper
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0209/0209001.pdf
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    References listed on IDEAS

    as
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    7. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 305-339.
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    Cited by:

    1. María Torrado & Álvaro Escribano, 2020. "European gasoline markets: price transmission asymmetries in mean and variance," Applied Economics, Taylor & Francis Journals, vol. 52(42), pages 4621-4638, September.
    2. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
    3. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.
    4. Bakytzhanova Zhuldyz, 2005. "Asymmetric fuel pricing in transition economies: The case of Moscow," EERC Working Paper Series 05-18e, EERC Research Network, Russia and CIS.
    5. Aldaba, Rafaelita M., 2003. "Regulatory Policies and Reforms in the Power and Downstream Oil Industries," Discussion Papers DP 2003-16, Philippine Institute for Development Studies.

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    More about this item

    Keywords

    gasoline; price asymmetry; price adjustment; Philippines;
    All these keywords.

    JEL classification:

    • L - Industrial Organization

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