Competition and price asymmetries in the Greek oil sector: an empirical analysis on gasoline market

Polemis, Michael

doi:10.1007/s00181-011-0507-7

Cited by 36 publications

(18 citation statements)

References 26 publications

(34 reference statements)

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“…Finally, the retail sale of fuel exhibits low mark-up ratio (1.087 or 1.130) revealing that the retail segment of the oil industry in Greece operates in a competitive way. This finding coincides with other empirical studies (see Polemis 2012). However, the oil sector in Greece, exhibits several distortions as a consequence of the existing legal framework, such as the absence of hypermarkets, and regulatory barriers in fuel transportation (Polemis 2012;Fafaliou and Polemis 2012).…”

Section: Resultssupporting

confidence: 88%

“…This finding coincides with other empirical studies (see Polemis 2012). However, the oil sector in Greece, exhibits several distortions as a consequence of the existing legal framework, such as the absence of hypermarkets, and regulatory barriers in fuel transportation (Polemis 2012;Fafaliou and Polemis 2012). Figure 1 encapsulates the mark-up ratio in each sub-period of the time span 1970-2007 for the 23 and 26 manufacturing and services sub-sectors respectively.…”

Section: Resultssupporting

confidence: 88%

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Measuring market power in the Greek manufacturing and services industries

Polemis

2014

International Review of Applied Economics

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This paper investigates the level of market power in the Greek manufacturing and services industry over the period . Based on the Roeger methodology, we investigate the competitive conditions in the examined industries at a disaggregated level (two and three digit ISIC codes). The empirical results indicate that the Greek manufacturing and services industries operate in non-competitive conditions. Moreover, average mark-up ratios are heterogeneous across sectors, with manufacturing having higher mark ups on average than services. In contrast to other related studies, we provide sufficient evidence about the movements of mark-up ratios over time. According to our findings, the mark-up ratios in the manufacturing sectors are, on average, higher in the post European Union (EU) accession period (1982)(1983)(1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992), as a result of the merger wave in the manufacturing industry. However, this upward trend stopped within the period (1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007), and the relevant ratios have decreased substantially. The econometric results are quite robust when the Two Stage Least Squares (2SLS) and the bootstrap method are applied. Lastly, the results of our analysis have a number of interesting implications for policy makers and government officials in light of the recent financial crisis that hit Greece.

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Section: Resultssupporting

confidence: 88%

Section: Resultssupporting

confidence: 88%

Measuring market power in the Greek manufacturing and services industries

Polemis

2014

International Review of Applied Economics

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“…They argued that the response of retail gasoline prices to changes in crude oil prices was asymmetric. Polemis [18] and Polemis and Fotis [19] investigated the asymmetries in the transmission of shocks to input prices into the wholesale and retail gasoline prices in 11 euro zone countries using generalized method of moments (GMM) estimation and a panel data error-correction model (ECM).…”

Section: Introductionmentioning

confidence: 99%

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

Chen

Huang

2017

Sustainability

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This paper employs an asymmetric error-correction model (AECM), and uses monthly data on wholesale prices of gasoline and diesel products in China and international crude oil prices from February 2006 to October 2013 to examine whether China's gasoline and diesel prices adjust asymmetrically to international crude oil price changes. Our empirical results suggest that increases and decreases in international oil prices have asymmetric effects on both wholesale prices of gasoline and diesel fuel in China, and that both increases and decreases in international oil prices have a greater effect on diesel prices than on gasoline prices in China. If there is no change in the maximum retail price, the asymmetry results from the transmission of wholesale prices in China with international oil prices. However, if there is a change in maximum retail prices, both international oil prices and maximum retail prices cause the asymmetry.

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“…The "rockets and feathers" hypothesis has been extensively addressed in the literature for a large number of economies over the last thirty years or so. The majority of the studies detect asymmetry in domestic retail price adjustments; see, for 7 instance the summaries contained in, inter alia, Polemis (2012), Perdiguero-Garcia (2013), Kristoufeck and Lunackova (2015) and Ogbuabor et al (2018). However, not all studies provide the same results.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Some evidence on the Greek market is reported in studies which cover country groups (Meyler, 2009;Cleridis, 2010;Polemis and Fotis (2013)): Of these, Meyler (2009) and Polemis and Fotis (2013) detect asymmetry in the response of retail fuel prices to cost increases and decreases in Greece, whereas Cleridis (2010) does not find any indications of asymmetric pricing. There exists one study, which tests for asymmetries exclusively in the Greek oil market: Polemis (2012), uses monthly observations for the period January 1988-June 2006 and applies the Asymmetric Error Correction Model (AECM) technique. He provides evidence of asymmetry in the retail gasoline price adjustments in both the long and the short term, evidence which implies poor competition in the oil market in Greece.…”

Section: Literature Reviewmentioning

confidence: 99%

Asymmetric Price Adjustment and the Effects of Structural Reforms in a Low Income Environment: The Case of the Gasoline Market in Greece

Bragoudakis

Sideris²

2019

SSRN Journal

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The pricing mechanism in the gasoline market has often been the subject of public debate in Greece during the crisis years. Inefficient pricing could imply oligopolistic practices in the market and losses to consumers' welfare in a period characterised by a dramatic fall in consumers' income and standard of living. A way to test whether pricing is efficient in the market is by testing for asymmetries in the adjustment of domestic gasoline prices to world oil price changes. The present paper has two aims: (a) The first is to investigate the existence of asymmetric adjustment of gasoline prices to oil price variations in the Greek market, thus contributing to the relevant literature. (b) The second is to examine whether the structural reforms that took place in the gasoline market and the large fall in income, which characterise consumers' behaviour in the recent period, had any impact on the pricing dynamics in the market. To this end, the analysis: (i) applies the TAR-ECM threshold cointegration technique, which assumes asymmetric adjustment towards the long-run equilibrium; (ii) makes use of observations at the highest frequency available; and (iii) uses the most recent data. The results provide evidence in favour of symmetric behaviour just for the crisis period. This may reflect competitive behaviour by suppliers who had to interact in a low demand environment and under a new institutional framework following the reforms, along with a change in consumers' search behaviour who had to deal with a severe fall in their income.

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Competition and price asymmetries in the Greek oil sector: an empirical analysis on gasoline market

Cited by 36 publications

References 26 publications

Measuring market power in the Greek manufacturing and services industries

Measuring market power in the Greek manufacturing and services industries

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

Asymmetric Price Adjustment and the Effects of Structural Reforms in a Low Income Environment: The Case of the Gasoline Market in Greece

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