Gasoline Pricing in the Country and the City

37 Pages Posted: 27 Feb 2015 Last revised: 27 May 2018

David P. Byrne

The University of Melbourne

Date Written: April 5, 2018

Abstract

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

Byrne, David P., Gasoline Pricing in the Country and the City (April 5, 2018). Available at SSRN: https://ssrn.com/abstract=2570640 or http://dx.doi.org/10.2139/ssrn.2570640

David P. Byrne (Contact Author)

The University of Melbourne ( email )

Level 4
111 Barry Street
Melbourne, Victoria 3010
Australia

HOME PAGE: http://sites.google.com/view/dprbyrne/

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