No abstract

Literature provides significant border effects on consumer prices even for sub‐national regions. Nevertheless, Gorodnichenko and Tesar showed that the evidence from the usual methodology could be illusory if there is cross‐regional heterogeneity in the distribution of within‐region price differentials. We designed a quasi‐experiment that, using a transport fuel dataset, is applied to the Spanish regions. We found that, despite controlling for regional tax divergences, price differences remained critically dependent on regions. However, results suggest that the presence of borders per se is practically negligible to explain the lack of regional integration. Factors underlying the distribution heterogeneity are responsible for this.

a b s t r a c tThe data described in this article were collected daily over the period June 10, 2010, to November 25, 2012, from the website of the Spanish Ministry of Industry, Energy and Tourism. The database includes information about fuel stations regarding to their prices (both gross and net of taxes), brand, location (latitude and longitude), and postal code in the Spanish provinces of Madrid and Barcelona. Moreover, obtaining the postal codes has allowed us to select those stations that are operating within the metropolitan areas of Madrid and Barcelona. By considering those fuel stations that uninterruptedly provided prices during the entire period, the data can be especially useful to explore the dynamics of prices in fuel markets. This is the case of Balaguer and Ripollés (2016), "Asymmetric fuel price responses under heterogeneity" [1], who, taking into account the presence of the potential heterogeneity of the behaviour of fuel stations, used this statistical information to perform an analysis on asymmetric fuel price responses.

This paper empirically investigates the dynamics of price dispersion in retail fuel markets as a response to the corresponding wholesale price changes. For this purpose we take advantage of a daily dataset of prices fixed by gas stations in two Spanish regions. It is consistently found that retail price dispersion is temporarily enlarged as a consequence of wholesale price increases, while it is reduced due to decreases. The presence of asymmetries in the short-run dynamics is also revealed. The impact of positive changes in the wholesale price is, in the first days of adjustment, clearly greater. The dynamics pattern could be explained, at least in part, by the faster response of prices in the stations associated with the two vertically integrated companies that have the largest market share (i.e. Repsol and Cepsa).

Despite the relatively large number of gas stations reached in Spain after decades of sectorial reforms, pre-tax fuel prices in the country remain systematically among the highest in the EU. The literature provides evidence suggesting that a low intensity of competition in the retail distribution could contribute to these casual observations. With the purpose of shedding light on ways to design e↵ective competition measures, we conduct an empirical analysis of more than ten million observations containing information about prices, brands, and locations at the station level. This allows us to know whether the exit (entry) of some classes of stations have the ability to reduce the prices of nearby competitors. Our results suggest that the presence in a local market of a station belonging to the network of the dominant market companies will tend to generate prices above the average. This is not only because these stations set higher prices but also because their presence will give rise to overpricing by local competitors. The opposite occurs with the self-advertised as "low-cost" stations. Policy measures promoting the gradual exit of stations associated with the dominant companies seem quite reasonable in view of the commitment to the transition toward transport decarbonization.