Are petrol retailers less responsive to changes in wholesale or crude oil prices when they face lower competition? The case of Greater Sydney

Valadkhani, Abbas; Anwar, Sajid; Ghazanfari, Arezoo; Nguyen, Jeremy

doi:10.1016/j.enpol.2021.112278

Cited by 7 publications

(5 citation statements)

References 23 publications

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“…We gathered evidence that corroborates the hypothesis of the "rocket" and "feather" effects in gasoline price transmission. Our findings support the results of Bacon (1991), Manning (1991), Kirchgässner and Kübler (1992), Borenstein et al (1997), Galeoti et al (2003, Grasso and Manera (2007), Balmaceda and Soruco (2008), Silva et al (2011), Cânedo-Pinheiro (2012, Polemis and Fotis (2014), Chatopadhyay and Mitra (2015), Uchôa (2016), Chen et al (2017), Valadkhani and Smyth (2018), Ogbuabor et al (2020), andValadkhani et al (2021).…”

Section: Conclusion and Policy Implicationssupporting

confidence: 90%

“…There seems to be a consensus that imperfect competition is the main source of positive asymmetries. However, some approaches stand out, such as market power, collusion and profitability (Bedrossian and Moschos, 1988;Uchôa, 2016), search costs (Uchôa, 2016;Rodrigues and Losekann, 2018) and other kinds of strategy (Valadkhani et al, 2021).…”

Section: Literature Synthesis and Research Gapmentioning

confidence: 99%

“…According to Valadkhani et al (2021), retailers know how to hide an anti-competitive pricing behavior by adopting location-specific and time-varying tactics. In this context, the lack of transparency could lead to a mismatch between the resale price and the cost of unleaded petrol.…”

Section: Literature Synthesis and Research Gapmentioning

confidence: 99%

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Asymmetry in Gasoline Price Transmission: How do Fuel Pricing Strategy and the Ethanol Addition Mandate Affect Consumers?

Raeder

Rodrigues

Losekann

2022

IJEEP

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This work aims at verifying the existence of asymmetries in gasoline price transmission between refining, distribution, and gas stations. The analysis covers two moments: before (2006-2016) and after (2016-2020) the new fuel pricing strategy adopted in the refining sector. Before 2016, gasoline prices in refineries were stable due to price intervention. After that, prices fluctuated in convergence with the international market. In this paper, we also consider ethanol prices. Due to an addition mandate, ethanol prices influence gasoline price' dynamics. Our hypothesis is that there are “rocket” and “feather” patterns. This means that positive changes in costs are rapidly and fully transmitted to prices, while negative cost changes tend to be transmitted gradually. As a consequence, there is a cost for consumers. We use Dynamic Ordinary Least Squares estimators and Error Correction Models to test the presence of asymmetries and Cumulative Response Functions to measure consumer cost. Results confirm an asymmetric price transmission and indicate that the new pricing strategy has changed the readjustment dynamic. Although we detect asymmetries in both periods, the new pricing strategy proved to be better for consumers, as social costs decreased after its adoption.

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Section: Conclusion and Policy Implicationssupporting

confidence: 90%

Section: Literature Synthesis and Research Gapmentioning

confidence: 99%

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Asymmetry in Gasoline Price Transmission: How do Fuel Pricing Strategy and the Ethanol Addition Mandate Affect Consumers?

Raeder

Rodrigues

Losekann

2022

IJEEP

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“…Kvasnička et al [10] examined the effect of station density on retail petrol prices in the Czech Republic and found that station density negatively affects petrol prices. Considering the impact of competition on price-setting decisions, Valadkhani et al [11] examined the impact of upstream cost shocks on the retail petrol prices in Sydney. They found that passthrough is faster among stations with more intense local competition.…”

Section: Background and Literaturementioning

confidence: 99%

“…x it ) and cluster format (wp it − wp i ) to test the within effects in the RE model. Following Allison [46], the within-between (or hybrid) model is given in Equation (11) as follows:…”

Section: Regression Analysismentioning

confidence: 99%

What Drives Petrol Price Dispersion across Australian Cities?

Ghazanfari

2022

Energies

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Petrol directly impacts the ability of and extent to which households can engage in day-to-day activities and ultimately directly influences the aggregate economic activity. Petrol price increases can lead to major economic disruption, especially among the most vulnerable, such as low-income families. In Australia, petrol prices differ substantially between metropolitan and regional areas, and regional drivers must pay more for purchasing petrol than those in capital cities. This research explored why retail petrol prices vary from one city to another within and between Australian regions. In this study, clustering methods and panel models will be used to identify factors that cause price differences. The findings revealed that a considerable part of the price differences arose from specific characteristics of cities that influence the demand and supply of petrol, thereby causing variations in price decisions. Petrol prices were substantially influenced by wholesale petrol prices, oil prices, petrol and diesel vehicles, population density, station density, and public transport accessibility. These factors are the main determinants that contribute significantly to price variations between Australian cities. The findings provide critical information for economic agents that interact in this market. From a social welfare perspective, government authorities can consider these factors to improve living standards and consumers’ welfare under price pressure in regional cities.

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Analyzing different types of asymmetric responses in terminal gate prices of petrol and diesel across major Australian seaports: Implications for fuel price monitoring strategies

Valadkhani

2023

Energy Economics

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Are petrol retailers less responsive to changes in wholesale or crude oil prices when they face lower competition? The case of Greater Sydney

Cited by 7 publications

References 23 publications

Asymmetry in Gasoline Price Transmission: How do Fuel Pricing Strategy and the Ethanol Addition Mandate Affect Consumers?

Asymmetry in Gasoline Price Transmission: How do Fuel Pricing Strategy and the Ethanol Addition Mandate Affect Consumers?

What Drives Petrol Price Dispersion across Australian Cities?

Analyzing different types of asymmetric responses in terminal gate prices of petrol and diesel across major Australian seaports: Implications for fuel price monitoring strategies

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