Analysis of Asymmetry in Slovak Gasoline and Diesel Retail Market

8 Pages Posted: 11 Dec 2019

See all articles by Karol Szomolányi

Karol Szomolányi

University of Economics in Bratislava - Department of Operations Research and Econometrics

Martin Lukacik

University of Economics in Bratislava - Department of Operations Research and Econometrics

Adriana Lukacikova

University of Economics in Bratislava - Department of Operations Research and Econometrics

Date Written: September 12, 2019

Abstract

In this paper we examine if Slovak retail gasoline and diesel prices respond more quickly when crude oil price rises rather than when it decreases. The error correction model with irreversible behaviour of explanatory variables is considered to be basic tool for the analysis of asymmetric retail price reaction of gasoline and diesel. The explanatory variable is divided into two variables, the positive and the negative differences implying a price increase and a price decrease. Due to the link between the gasoline and diesel markets, we assume a common co-integration relationship. Therefore, we also estimate vector error correction model in our analysis. The both model approaches reject expected asymmetry in the retail price reactions on crude oil changes.

Keywords: gasoline and diesel retail price research, irreversible model, co-integration, rockets and feathers

JEL Classification: L71, C22, C52

Suggested Citation

Szomolányi, Karol and Lukacik, Martin and Lukacikova, Adriana, Analysis of Asymmetry in Slovak Gasoline and Diesel Retail Market (September 12, 2019). 2019 ENTRENOVA Conference Proceedings. Available at SSRN: https://ssrn.com/abstract=3490634 or http://dx.doi.org/10.2139/ssrn.3490634

Karol Szomolányi (Contact Author)

University of Economics in Bratislava - Department of Operations Research and Econometrics ( email )

Dolnozemská cesta 1
Bratislava, 852 35
Slovakia

Martin Lukacik

University of Economics in Bratislava - Department of Operations Research and Econometrics ( email )

Dolnozemská cesta 1
Bratislava, 852 35
Slovakia

Adriana Lukacikova

University of Economics in Bratislava - Department of Operations Research and Econometrics

Dolnozemská cesta 1
Bratislava, 852 35
Slovakia

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