Download or read book Asymmetric Dynamic Pricing in a Local Gasoline Retail Market written by Felipe Balmaceda and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric-price adjustment is a common phenomenon in many markets around the world, particularly in retail gasoline markets. This paper studies the existence of this phenomenon in the retail gasoline market in the city of Santiago, Chile, using a data set of weekly gas station prices that covers a period of almost four years. We found that prices adjust asymmetrically, and the asymmetry is different for branded gas stations and unbranded stations. In addition, we found that the asymmetry for high-margin stations is statistically equivalent to that for low-margin stations. This evidence is suggestive of collusion as a rationale for the asymmetric pricing policy observed.
Download or read book The Internet Search and Asymmetric Pricing written by David P. Byrne and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does the Internet effect retail pricing? In contrast to previous empirical research that focuses on price dispersion and static margins, this paper examines how the Internet and web-based price clearing houses effect dynamic asymmetric pricing adjustment (e.g., "rockets and feathers"). We exploit a unique policy intervention in the context of the retail gasoline market that introduced a price clearinghouse in some markets but not others. We find stark evidence that the policy eliminated asymmetric price adjustment and increase the rate of passthrough of falling costs to retail prices. These results support search-based explanations for asymmetric price adjustment.
Download or read book Price Response Asymmetry and Spatial Differentiation in Local Retail Gasoline Markets written by Jeremy A. Verlinda and published by BiblioGov. This book was released on 2013-06 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores the possibility that local market power influences the observed asymmetric relationship between changes in wholesale gasoline costs and changes in retail gasoline prices. I exploit an original data set of weekly gas station prices in Southern California from September 2002 to May 2003, and take advantage of detailed station and local market level characteristics to determine the extent to which spatial differentiation influences price response asymmetry. I find that brand identity, proximity to rival stations, bundling and advertising, operation type, and local market features and demographics each influence a station's predicted price-response asymmetry.
Download or read book Price response Asymmetry and Spatial Differentiation in Local Retail Gasoline Markets written by Jeremy A. Verlinda and published by . This book was released on 2007 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Asymmetries in Retail Gasoline Price Dynamics and Local Market Power written by George Deltas and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using monthly data from the 48 contiguous states (except Nevada) for the 1988-2002 period, it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases. Moreover, markets with high average retail-wholesale margins experience a slower adjustment and a higher degree of asymmetry. These results are robust to whether or not an error correction term is used, and to a number of other specifications. Since gasoline is the only variable input, one could reasonably assume that average margins in a state reflect the degree of market power at the retail level. This suggests that sticky prices and response asymmetries in the gasoline market are, at least partially, a consequence of retail market power, raising the possibility that slow price adjustments and asymmetric price responses could be used as an indicator of potential departure from perfect competition. It is also shown that out-of-sample forecasts based on asymmetric models yield substantially better predictions for the path of retail prices than forecasts based on the symmetric models. This result is robust to different measures of forecast accuracy. The higher accuracy of the out-of-sample forecasts based on asymmetric models indicates that these asymmetries are not just an outcome of fitting to a particular sample but represent the underlying data generating process.
Download or read book Handbook on the Economics of Retailing and Distribution written by Emek Basker and published by Edward Elgar Publishing. This book was released on 2016-01-29 with total page 513 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Handbook explores and critically examines current research in economics and marketing science on key issues in retailing and distribution. Providing a rich perspective for the discussion of public policy, contributions from several disciplines and continents range from the history of chains and the impact of multinational retailers on international trade patterns to US merger policy in the retail context, the rise of the Internet, and consumer-to-consumer sales. The chapters address methodological issues such as the structural estimation of entry games between retailers, productivity measurement when both inputs and output are not fully observable, and demand estimation with variable assortment. Policy issues explored include mergers, zoning, and the regulation of buyer power, while other chapters address some of the recent exciting developments in technology, retail formats, and data availability. The book goes on to study the changes in online retailing and ‘big data’, and to examine competition in specific retail sectors including gasoline stations, automobile dealerships, supermarkets, and ‘big box’ retail. This state-of-the-art Handbook is an essential reference for students and academics of economics and marketing science, and offers an outsider’s perspective to specialists in operations research, data analytics, geography, and sociology.
Download or read book Prices and Pricesetting written by Riemer Pieter Faber and published by Rozenberg Publishers. This book was released on 2010 with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Dynamic Pricing in Retail Gasoline Markets written by Severin Borenstein and published by . This book was released on 1993 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper tests for price patterns in retail gasoline markets consistent with those predicted by models of implicit collusion among firms. Recent supergame models show that the highest supportable collusive price is a function of today's profit relative to expected future profit: collusive prices are higher when predictable changes in demand or cost lead firms to expect that collusive profits are increasing rather than declining. Ceteris paribus, collusive profits will be expected to increase when demand is expected to increase and/or costs are expected to decline. Using panel data on sales volume, and retail and wholesale prices in 59 cities over 72 months, we find results consistent with these predictions. Controlling for current demand and input price, the elasticity of current retail margins with respect to expected next-month demand is about 0.37. The elasticity of current margins with respect to next-month wholesale price is about -0.37. The results are inconsistent with inventory effects.
Download or read book Retail Gasoline Price Dynamics and Local Market Power written by George Deltas and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using monthly data from the 48 contiguous states (except Nevada) for the 1988-2002 period, it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases. Moreover, markets with high average retail-wholesale margins experience a slower adjustment and a more asymmetric response. Since gasoline is the only variable input, average margins in a state likely reflect the degree of retail market power. This suggests that sticky prices and response asymmetries in the gasoline market are, at least partially, a consequence of retail market power.
Download or read book Essays on Market Response to Changes in Costs and Price Transparency written by Anna Olga Smolnik and published by Cuvillier Verlag. This book was released on 2017-01-25 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dissertation consists of three empirical studies and takes a closer look at price fluctuations using German gasoline prices as an example for a homogenous good. It analyzes consumers’ reaction to price fluctuations and respectively the pricing behavior of firms. The first paper, which was developed with co-authorship, explores consumers’ online price search effects on the pricing behavior of firms (gasoline price level and price dispersion). As regulators have recently implemented a mechanism for reporting all price changes to a central data base, the core assumption of this price reporting scheme is that the increase in price transparency will lead to a decline in the price level and a reduction in price dispersion. The second study addresses the question whether German gas stations adjust their retail prices asymmetrically in response to crude oil price changes, i.e., whether gas stations react quicker to crude oil price increases than to crude oil price decreases. The third study aims to analyze whether consumers react more strongly to gasoline price increases or to price decreases when considering buying a new vehicle.
Download or read book Asymmetric Pass Through in U S Gasoline Prices written by Federal Trade Commission and published by CreateSpace. This book was released on 2014-09-25 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents new evidence of asymmetric pass-through, the notion that upward cost shocks are passed through faster than downward cost shocks, in U.S. gasoline prices. Much of the extant literature comes to seemingly contradictory conclusions about the existence of an asymmetry, though the differences may be due to different aggregation (both over time and geographic markets) and the use of different price series including crude oil, wholesale, and retail gasoline prices. I utilize a large and detailed dataset to determine where evidence of a pass-through asymmetry exists, and how it depends on the aggregation and price series chosen by the researcher. Using the standard error correction model, I find evidence of pass-through asymmetry in the response of daily and weekly retail prices to wholesale rack price changes, though the magnitude varies by geographic market. On average, retail prices rise more than four times as fast as they fall. Branded gasoline features significantly more asymmetry with respect to rack prices compared with unbranded gasoline. Over time, nation-wide asymmetry varies significantly from year to year peaking in 2005. Midwest cities, like Louisville and Minneapolis, feature more asymmetry compared with other parts of the country. F-tests broadly confirm the results and illustrate that data selection and aggregation, as well as model specification, can have important implications on the findings of asymmetric pass-through.
Download or read book Dynamic Fuel Price Pass Through written by Mr.Kangni R Kpodar and published by International Monetary Fund. This book was released on 2017-01-18 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.
Download or read book Price Changes in the Gasoline Market written by and published by DIANE Publishing. This book was released on 1999 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report examines a recurring question about gasoline markets: why, especially in times of high price volatility, do retail gasoline prices seem to rise quickly but fall back more slowly? Do gasoline prices actually rise faster than they fall, or does this just appear to be the case because people tend to pay more attention to prices when they`re rising? This question is more complex than it might appear to be initially, and it has been addressed by numerous analysts in government, academia and industry. The question is very important, because perceived problems with retail gasoline pricing have been used in arguments for government regulation of prices. The phenomenon of prices at different market levels tending to move differently relative to each other depending on direction is known as price asymmetry. This report summarizes the previous work on gasoline price asymmetry and provides a method for testing for asymmetry in a wide variety of situations. The major finding of this paper is that there is some amount of asymmetry and pattern asymmetry, especially at the retail level, in the Midwestern states that are the focus of the analysis. Nevertheless, both the amount asymmetry and pattern asymmetry are relatively small. In addition, much of the pattern asymmetry detected in this and previous studies could be a statistical artifact caused by the time lags between price changes at different points in the gasoline distribution system. In other words, retail gasoline prices do sometimes rise faster than they fall, but this is largely a lagged market response to an upward shock in the underlying wholesale gasoline or crude oil prices, followed by a return toward the previous baseline. After consistent time lags are factored out, most apparent asymmetry disappears.
Download or read book Asymmetric Price Responses of Gasoline Stations written by Riemer P. Faber and published by . This book was released on 2009 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Competition Policy and Price Fixing written by Louis Kaplow and published by Princeton University Press. This book was released on 2013-06-30 with total page 508 pages. Available in PDF, EPUB and Kindle. Book excerpt: Throughout the world, the rule against price fixing is competition law's most important and least controversial prohibition. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings conflict with the teachings of oligopoly theory that supposedly underlie modern competition policy. Competition Policy and Price Fixing provides the needed analytical foundation. It offers a fresh, in-depth exploration of competition law's horizontal agreement requirement, presents a systematic analysis of how best to address the problem of coordinated oligopolistic price elevation, and compares the resulting direct approach to the orthodox prohibition. In doing so, Louis Kaplow elaborates the relevant benefits and costs of potential solutions, investigates how coordinated price elevation is best detected in light of the error costs associated with different types of proof, and examines appropriate sanctions. Existing literature devotes remarkably little attention to these key subjects and instead concerns itself with limiting penalties to certain sorts of interfirm communications. Challenging conventional wisdom, Kaplow shows how this circumscribed view is less well grounded in the statutes, principles, and precedents of competition law than is a more direct, functional proscription. More important, by comparison to the communications-based prohibition, he explains how the direct approach targets situations that involve both greater social harm and less risk of chilling desirable behavior--and is also easier to apply.
Download or read book Essays on Information Competition and Pricing Dynamics in the Retail Gasoline Market written by Woo-Hyung Hong and published by . This book was released on 2015 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the role of information in market performance, and pricing dynamics observed in the retail gasoline market. In Chapter 1, we empirically test whether smartphones, as information-providing devices, can improve market performance and reduce price dispersion. We treat the introduction of smartphones in the Korean gasoline market as a natural experiment to investigate the impact of smartphones on competition among gas stations. Smartphones provided consumers with direct access to price information through OPINET, a government-sponsored Internet website. Our results indicate that the adoption of smartphones is associated with dramatic decreases in price dispersion and average price-cost margins, thereby creating consumer gains. Additionally, we found a sudden decline in entries and a slow increase in exits after the introduction of smartphones. Chapter 2 investigates how and why a link between market power and asymmetric pricing occurs. Exploiting unique island panel data from the Korean gasoline market, we propose geographical separation as a reliable measure of market power. Our findings confirm a positive correlation between market power and price-response asymmetry. We provide direct evidence of tacit collusion by investigating sticky pricing behaviors and suggest that the tacit collusion is the main channel through which market power influences asymmetric pricing. Additionally, we examine the effect of station heterogeneity on asymmetric pricing to provide further evidence of tacit collusion even in relatively competitive environments.
Download or read book Asymmetric Price Adjustment and Consumer Search written by Matthew S. Lewis and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article proposes a new explanation for why retail prices respond more quickly to cost increases than cost decreases. I develop a search model that assumes consumers' expectations of prices are based on prices observed during previous purchases. This model predicts that consumers search less when prices are falling, which results in higher profit margins and a slower price response to cost changes. I then empirically examine patterns of retail gasoline price response and price dispersion to show that this model predicts observed price behavior better than previously suggested explanations.
