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Price adjustments by a gasoline retail chain
2000 (English)In: Scandinavian Journal of Economics, ISSN 0347-0520, E-ISSN 1467-9442, Vol. 102, no 1, 101-121 p.Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
2000. Vol. 102, no 1, 101-121 p.
Keyword [en]
price adjustment, sticky prices, pass-through of costs, gasoline market, empirical-test, markets
Identifiers
URN: urn:nbn:se:kth:diva-19899ISI: 000088160000006OAI: oai:DiVA.org:kth-19899DiVA: diva2:338591
Note
QC 20100525Available from: 2010-08-10 Created: 2010-08-10Bibliographically approved

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