Price Adjustments by a Gasoline Retail Chain

Posted: 21 Jul 2000

See all articles by Marcus Asplund

Marcus Asplund

London Business School - Department of Economics; Göteborg University - School of Business, Economics and Law; Centre for Economic Policy Research (CEPR)

Rikard Eriksson

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)

Richard Friberg

Stockholm School of Economics - Department of Economics

Abstract

We use daily data to examine price responses in the Swedish gasoline market to changes in the Rotterdam spot price, exchange rates and taxes. The distribution of price adjustments by a leading retail chain, for the period January 1980 to December 1996, is symmetric with no small adjustments. An error correction model shows that, in the short run, prices gradually move towards the long-run equilibrium in response to cost shocks. There is some evidence that, also in the short run, prices are stickier downwards than upwards. Prices respond more rapidly to exchange rate movements than to the spot market price. Our analysis emphasizes that to fully understand price adjustments it is necessary to examine data sets where the sample frequency at least matches that of price adjustments.

JEL Classification: C22, E31, F14, L71

Suggested Citation

Asplund, Marcus and Eriksson, Rikard and Friberg, Richard, Price Adjustments by a Gasoline Retail Chain. Scandinavian Journal of Economics, Vol. 102, No. 1, March 2000. Available at SSRN: https://ssrn.com/abstract=234982

Marcus Asplund (Contact Author)

London Business School - Department of Economics ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom
+44 20 7262 5050 x3263 (Phone)

Göteborg University - School of Business, Economics and Law ( email )

SE- 405 30 Goteborg
Sweden
+46 31 773 2553 (Phone)
+46 31 773 1326 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Rikard Eriksson

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE) ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

Richard Friberg

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9645 (Phone)
+46 8 720 7752 (Fax)

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