Abstract

http://ssrn.com/abstract=1903558
 
 

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How Do Consumers Respond to Gasoline Price Cycles?


David P. Byrne


University of Melbourne

Gordon W Leslie


Stanford University - Department of Economics

Roger Ware


Queen's University

November 28, 2013


Abstract:     
This paper empirically studies how consumers respond to retail gasoline price cycles. Our analysis uses new station-level price data from local markets in Ontario, Canada, and a unique market-level measure of consumer responsiveness based on web traffic from gasoline price reporting websites. We first document how stations use coordinated pricing strategies that give rise to large daily changes in price levels and dispersion in cycling gasoline markets. We then show consumer responsiveness exhibits cycles that move with these price fluctuations. Through a series of tests we find that forward-looking stockpiling behavior by consumers plays a central role in generating these patterns.

Number of Pages in PDF File: 25

Keywords: Retail gasoline price cycles, Dynamic demand, Consumer search

JEL Classification: L11, L9, D22

working papers series





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Date posted: August 2, 2011 ; Last revised: December 4, 2013

Suggested Citation

Byrne, David P. and Leslie, Gordon W and Ware, Roger, How Do Consumers Respond to Gasoline Price Cycles? (November 28, 2013). Available at SSRN: http://ssrn.com/abstract=1903558 or http://dx.doi.org/10.2139/ssrn.1903558

Contact Information

David P. Byrne (Contact Author)
University of Melbourne ( email )
Melbourne, Victoria 3010
Australia
HOME PAGE: http://www.economics.unimelb.edu.au/
Gordon W Leslie
Stanford University - Department of Economics ( email )
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
Roger Ware
Queen's University (Canada) ( email )
Kingston, Ontario K7L 3N6
Canada
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References:  25

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