The dynamics pattern of price dispersion in retail fuel markets

Balaguer, Jacint; Ripollés, Jordi

doi:10.1016/j.eneco.2018.07.004

Cited by 10 publications

(4 citation statements)

References 42 publications

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“…The dynamics of pricing in retailing constitute one of the essential supports for this idea. Pricing behavior is found to be basically dependent on the strategy of the two dominant companies, which together respond faster to changes in wholesale fuel prices than other competitors (Balaguer and Ripollés, 2018a). Their price leadership is quite consistent with early research highlighting the capacity to generate collusive agreements in this market (García, 2010).…”

Section: Empirical Literaturesupporting

confidence: 76%

Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain

Balaguer

Ripollés

2020

Energy Policy

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Despite the relatively large number of gas stations reached in Spain after decades of sectorial reforms, pre-tax fuel prices in the country remain systematically among the highest in the EU. The literature provides evidence suggesting that a low intensity of competition in the retail distribution could contribute to these casual observations. With the purpose of shedding light on ways to design e↵ective competition measures, we conduct an empirical analysis of more than ten million observations containing information about prices, brands, and locations at the station level. This allows us to know whether the exit (entry) of some classes of stations have the ability to reduce the prices of nearby competitors. Our results suggest that the presence in a local market of a station belonging to the network of the dominant market companies will tend to generate prices above the average. This is not only because these stations set higher prices but also because their presence will give rise to overpricing by local competitors. The opposite occurs with the self-advertised as "low-cost" stations. Policy measures promoting the gradual exit of stations associated with the dominant companies seem quite reasonable in view of the commitment to the transition toward transport decarbonization.

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Section: Empirical Literaturesupporting

confidence: 76%

Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain

Balaguer

Ripollés

2020

Energy Policy

Self Cite

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“…As can be seen in a survey by Eckert (2013), there are interesting issues largely debated in the industrial economics field that have been analyzed from the reality of this sector. Thus, for example, some of these empirically examined topics have been cost pass-through asymmetries (e.g., Bacon, 1991, Bachmeier andGri n, 2003;Deltas, 2008), Edgeworth cycles (e.g., Noel, 2007;Noel, 2009;Lewis and Noel, 2011), merger e↵ects (e.g., Coloma, 2002;Simpson and Taylor, 2008;Houde, 2012), regulatory impacts (e.g., Vita, 2000;Taylor and Fischer, 2003;Bernardo, 2018), competition e↵ect on price dispersion (e.g., Lewis, 2008;Chandra and Tappata, 2011;Balaguer and Ripollés, 2018a), as well as the e↵ect of competition on price levels. Since the early works, the literature on this last topic has incorporated substantial methodological advances.…”

Section: Empirical Literaturementioning

confidence: 99%

High temperature heat pump integration into district heating network

Mateu-Royo

Sawalha

Mota-Babiloni

et al. 2020

Energy Conversion and Management

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Despite the relatively large number of gas stations reached in Spain after decades of sectorial reforms, pre-tax fuel prices in the country remain systematically among the highest in the EU. The literature provides evidence suggesting that a low intensity of competition in the retail distribution could contribute to these casual observations. With the purpose of shedding light on ways to design e↵ective competition measures, we conduct an empirical analysis of more than ten million observations containing information about prices, brands, and locations at the station level. This allows us to know whether the exit (entry) of some classes of stations have the ability to reduce the prices of nearby competitors. Our results suggest that the presence in a local market of a station belonging to the network of the dominant market companies will tend to generate prices above the average. This is not only because these stations set higher prices but also because their presence will give rise to overpricing by local competitors.The opposite occurs with the self-advertised as "low-cost" stations. Policy measures promoting the gradual exit of stations associated with the dominant companies seem quite reasonable in view of the commitment to the transition toward transport decarbonization.

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“…Suvankulov et al (2012) analyzed the integration process in Canadian provinces between 2000 and 2010 by observing a substantial convergence of prices on average but with six cities in the province of Nova Scotia which had a divergent pattern compared to the rest of the country. Balaguer and Ripollés (2018) observe a significant divergence in the price of gasoline in the Spanish provinces suggesting a lack of market integration at regional level. The di↵erent level of prices can be attributed to transportation costs, taxation, and other explicit barriers.…”

Section: Introductionmentioning

confidence: 87%

Testing the law of one-price in the US gasoline market: a long memory approach

2021

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This paper aims to shed new light on "law of one-price" in the United States' gasoline market over the period June-2003-December-2019. Specifically, we test for convergence of the retail prices of gasoline in di↵erent US PADDs, states and cities using the Local Whittle estimator (LW) and its variants (Robinson 1995, Shimotsu and Phillips 2005). Mean/trend reversion of the relative price of each unit will imply convergence toward the average price in the US thereby o↵ering support for the law of one-price. LW estimators allow us to consider the case where relative gasoline price are fractionally integrated process and may display long memory implying a slow process of convergence. The results obtained generally o↵er support for the law of one-price albeit with significant di↵erences in the rate of convergence between PADDs, States and Cities.

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The dynamics pattern of price dispersion in retail fuel markets

Cited by 10 publications

References 42 publications

Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain

Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain

High temperature heat pump integration into district heating network

Testing the law of one-price in the US gasoline market: a long memory approach

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