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Price Pass-Through in US Gasoline Markets

19 Pages Posted: 1 Jul 2011  

Benjamin F. Blair

Mississippi State University - College of Business

Phillip A. Mixon

Troy University

Date Written: June 2011

Abstract

Using an error-correction model in a seemingly unrelated regression framework, we examine regional differences in the price pass-through from crude oil spot prices to retail gasoline pump prices. We show that regional differences do exist both in the short run and long run adjustment process. Depending on the region, a $1 per barrel change in crude oil prices results in a change in retail gasoline pump prices somewhere between 2.52¢ and 2.65¢. We examine the presence of the rockets and feathers phenomenon using both a single period coefficient tests and multiple period impulse response functions.

Keywords: pass-through, gasoline, error correction

JEL Classification: Q4

Suggested Citation

Blair, Benjamin F. and Mixon, Phillip A., Price Pass-Through in US Gasoline Markets (June 2011). Available at SSRN: https://ssrn.com/abstract=1876557 or http://dx.doi.org/10.2139/ssrn.1876557

Benjamin F. Blair (Contact Author)

Mississippi State University - College of Business ( email )

Mississippi State, MS 39762-0964
United States

Phillip A. Mixon

Troy University ( email )

Troy, AL
United States

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