More New Evidence on Asymmetric Gasoline Price Responses

There exist two possible aggregation issues in studies to asymmetric price responses: (i) an issue due to aggregation over time, and (ii) an issue due to aggregation over space. Empirical studies already confirm the existence of the first issue. This paper confirms the existence of the second issue...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2016-01, Vol.37 (1), p.114-136
Main Author: Faber, Riemer P.
Format: Article
Language:English
Subjects:
Combinatorial probabilities
Financial markets
Forecasts and trends
Gasoline
Geometric probabilities
Prices and rates
Pricing
Probabilities
Probability theory
Service stations (Automotive)
Spot market
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Summary:There exist two possible aggregation issues in studies to asymmetric price responses: (i) an issue due to aggregation over time, and (ii) an issue due to aggregation over space. Empirical studies already confirm the existence of the first issue. This paper confirms the existence of the second issue by studying daily retail prices of individual gasoline stations. I find that 38% of the stations respond asymmetrically to changes in the gasoline spot market price. Hence, asymmetric pricing is a feature of individual firms.
ISSN:0195-6574
1944-9089
DOI:10.5547/01956574.37.1.rfab