Calendar Synchronization of Gasoline Price Increases

16 Pages Posted: 11 Apr 2019

Date Written: Summer 2019

Abstract

In many retail gasoline markets with Edgeworth price cycles, large and regular price increases occur on the same day of the week every week, that is, they are calendar synchronized. In this article, I test whether calendar synchronization leads to higher or lower consumer expenditures on gasoline compared to a world with cycles but without calendar synchronization. On one hand, firms may attempt to trigger price increases just prior to periods of normally high demand. On the other, consumers may be better able to predict and shift purchases to low price days of the cycle. Using high‐frequency gasoline volume data and matching it to high‐frequency price data, I find that the latter effect dominates. All else equal, consumer expenditures on gasoline fall with calendar synchronization in the study markets. I also calculate intertemporal price elasticities and find them to be high.

Keywords: calendar effects, dynamic oligopoly, Edgeworth price cycles, prediction, quantity‐weighting, retail gasoline

JEL Classification: L1, L2, L4, M3, Q4

Suggested Citation

Noel, Michael D., Calendar Synchronization of Gasoline Price Increases (Summer 2019). Journal of Economics & Management Strategy, Vol. 28, Issue 2, pp. 355-370, 2019, Available at SSRN: https://ssrn.com/abstract=3369864 or http://dx.doi.org/10.1111/jems.12267

Michael D. Noel (Contact Author)

Texas Tech University ( email )

237 Holden Hall
Box 41014
Lubbock, TX 79407
United States

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