Competition and price asymmetries in the Greek oil sector: an empirical analysis on gasoline marketReport as inadecuate




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Empirical Economics

, Volume 43, Issue 2, pp 789–817

First Online: 10 September 2011Received: 06 August 2010Accepted: 08 June 2011

Abstract

This article attempts to investigate the issue of asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail price of gasoline respectively. For this purpose, we utilise the error-correction methodology in the Greek gasoline market. The sample consists of monthly data covering the period of January 1988 to June 2006. We also try to analyse by using impulse response functions the effect of competition on the dynamic adjustment of gasoline price to which has been paid scant attention in the past. The results favour the common perception that retail gasoline prices respond asymmetrically to cost increases and decreases both in the long and the short-run. At the wholesale segment, there is a symmetric response of the spot prices of gasoline towards the adjustment to the short-run responses of the exchange rate. Lastly, after the deregulation, wholesale prices of gasoline tend to gradually restore equilibrium triggered by a price shock compared to the regulated period.

KeywordsAsymmetries Gasoline market Impulse response functions Competition Deregulation JEL ClassificationD40 L11 C51 C22  Download to read the full article text



Author: Michael L. Polemis

Source: https://link.springer.com/







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