Gasoline Pricing in the Country and the City
36 Pages Posted: 27 Feb 2015 Last revised: 22 Nov 2017
Date Written: November 22, 2017
In many markets, prices adjust quickly when costs rise, yet adjust sluggishly when costs fall. Such asymmetric pricing has received particular attention in retail gasoline where, worryingly, larger asymmetry has been related to greater market power. Using novel data from urban and rural gasoline markets, I document new evidence on this relationship by providing the first estimates of asymmetric pricing from rural towns. I find substantial asymmetry in these markets, show local market concentration is positively related to asymmetry, and highlight the role collusion potentially plays in generating these patterns.
Keywords: Asymmetric Pricing, Retail Gasoline, Sticky Pricing, Cost-based Pricing
JEL Classification: L11, L9, D22
Suggested Citation: Suggested Citation