Long- and short-run price asymmetries and hysteresis in the Italian gasoline market

Bagnai, Alberto; Ospina, Christian Alexander Mongeau

doi:10.1016/j.enpol.2014.12.017

Cited by 26 publications

(27 citation statements)

References 35 publications

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“…Chou and Tseng (), Chen et al . (), Bagnai and Ospina (), and Kirchgassner and Kubler () also found evidence of asymmetric price adjustment in Taiwanese, Chinese, Italian and German retail energy markets, while Polemis and Fotis () found similar evidence in selected European gasoline markets. Chou et al .…”

Section: An Overview Of the Empirical Literaturementioning

confidence: 85%

Asymmetric Price Transmission and Rent‐seeking in Road Fuel Markets: A Comparative Study of South Africa and Selected Eurozone Countries

Ogbuabor¹,

Eigbiremolen²,

Manasseh³

et al. 2018

African Development Review

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This paper presents the first-ever analysis of South African and Eurozone road fuel markets for the possibility that firms may be manipulating the tax system to conceal rent-seeking behavior using the nonlinear ARDL model recently advanced by Shin et al. (2013). The paper also examines these markets for asymmetric price adjustment following changes in crude oil costs in the aftermath of the 2007-2008 Global Financial Crisis. Monthly data for gasoline, automotive diesel and costs of imported crude oil from November 2004 to August 2016 were used. The results indicate that while the Eurozone road fuel markets are fraught with the problems of long-run rent-seeking, rockets and feathers effect, and the possibility that firms may be exploiting the tax system to conceal rent-seeking behaviors, the South African markets are free from these problems. Even though South Africa and the Eurozone countries have high oil import dependency ratios, this paper shows that government regulatory activities somewhat account for the difference in market outcomes.

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Section: An Overview Of the Empirical Literaturementioning

confidence: 85%

Asymmetric Price Transmission and Rent‐seeking in Road Fuel Markets: A Comparative Study of South Africa and Selected Eurozone Countries

Ogbuabor¹,

Eigbiremolen²,

Manasseh³

et al. 2018

African Development Review

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“…Brown and Yücel [28] provided a formal econometric exercise to test various explanations for price asymmetry and found that in the United States the asymmetric response of gasoline prices to changes in international crude oil prices is the result of market power. Bagnai and Ospina [29] argued that the observed asymmetry in the Italian gasoline market depends on oligopolistic coordination and non-competitive behavior in the gasoline retail markets.…”

Section: Resultsmentioning

confidence: 99%

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

Chen

Huang

2017

Sustainability

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This paper employs an asymmetric error-correction model (AECM), and uses monthly data on wholesale prices of gasoline and diesel products in China and international crude oil prices from February 2006 to October 2013 to examine whether China's gasoline and diesel prices adjust asymmetrically to international crude oil price changes. Our empirical results suggest that increases and decreases in international oil prices have asymmetric effects on both wholesale prices of gasoline and diesel fuel in China, and that both increases and decreases in international oil prices have a greater effect on diesel prices than on gasoline prices in China. If there is no change in the maximum retail price, the asymmetry results from the transmission of wholesale prices in China with international oil prices. However, if there is a change in maximum retail prices, both international oil prices and maximum retail prices cause the asymmetry.

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“…This paper definitely fits into the stream of competition studies on strategic behavior of the players in the oligopolistic industries and markets with an adequate policy implications. This study, however, differs significantly from other relevant works in this field, because: -it is the first approach focusing on a comparative examination of the APT for the individual market players; -the analysis concerns not only the usual pass-through from crude oil price to product prices, but we also included the pass-through of domestic currency exchange rate fluctuations, as in Bagnai & Ospina (2015) or Greenwood-Nimmo & Shin (2013), and other possible wholesale price determinants (a spot price of a reference product and prices of futures contracts), as implied by the Import Parity Pricing (the IPP) schema of the wholesale price determination. There are some qualitative evidences that IPP schema for establishing a wholesale price is presumably used by the two major players in the Polish market, PKN Orlen and LOTOS (Bejger, 2015a, pp.…”

Section: Introductionmentioning

confidence: 99%

Wholesale fuel price adjustment in Poland: examination of competitive performance

Bejger

2019

EiP

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Motivation: Import parity pricing, potentially provoking parallel pricing, and asymmetric price transmission are both considered as the factors that can distort competitiveness and foster collusive behavior on the fuel markets. Aim: The study encompass an analysis of usual 'rocket and feathers' reactions in response to common drivers of the gasoline wholesale price and comparative analysis of individual players' pricing paths in order to examine competitive performance of the market. To account for an implied IPP pricing mechanism, a set of common wholesale price determinants was expanded. Results: We revealed a significant short-run asymmetries in a transmission of all downstream price determinants and shown that the foreign exchange rate is a main driver underlying a positive asymmetry in the wholesale prices' paths. We compared dynamic price adjustment paths for the major players and revealed the common patterns. That suggest a strong possibility of parallel pricing.

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Long- and short-run price asymmetries and hysteresis in the Italian gasoline market

Cited by 26 publications

References 35 publications

Asymmetric Price Transmission and Rent‐seeking in Road Fuel Markets: A Comparative Study of South Africa and Selected Eurozone Countries

Asymmetric Price Transmission and Rent‐seeking in Road Fuel Markets: A Comparative Study of South Africa and Selected Eurozone Countries

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

Wholesale fuel price adjustment in Poland: examination of competitive performance

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