1. Rockets and Feathers Revisited: Asymmetric Retail Gasoline Pricing in the Era of Market Transparency
- Author
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Asane-Otoo, Emmanuel and Dannemann, Bernhard C.
- Subjects
Retail industry -- Economic aspects -- Prices and rates ,Gasoline -- Economic aspects -- Prices and rates ,Petroleum industry -- Economic aspects ,Company pricing policy ,Business ,Economics ,Petroleum, energy and mining industries - Abstract
In this paper, we revisit the empirical observation that prices rise like rockets when input costs increase but fall like feathers when input costs decrease. The analysis draws on a novel data set that includes daily retail prices of gasoline from 12,804 stations in Germany from January 1, 2014 to December 31, 2018. Our findings based on pooled-panel asymmetric error correction models indicate that the pattern of rockets and feathers is the norm rather than the exception. Our results further show that temporal aggregation of station-level price data leads to inaccurate inferences and could account for the inconclusive findings in the literature. Keywords: Asymmetric Pricing, Market Transparency, Search Intensity, Tacit Collusion, 1. INTRODUCTION This paper revisits the debate on the asymmetric response of retail gasoline prices to crude oil price changes. Retail fuel pricing, in general, remains an area of significant [...]
- Published
- 2022
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