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Empirical investigation of retail gasoline prices

Author

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  • Bergantino, Angela Stefania
  • Capozza, Claudia
  • Intini, Mario
Abstract
This paper explores the nature of price variation in the retail gasoline sector with a novel approach. An empirical model is proposed that jointly analyses: i) the spatial interaction between stations in price setting; ii) the direct and the indirect effect of local competition on prices; iii) the role of territorial factors, generally neglected in the studies on gasoline prices. For all these purposes, variables at sub-municipal level are constructed. The results of the empirical model, tested on the city of Rome, confirm the spatial price interaction across stations. Moreover, evidence of direct and indirect effects of local competition on prices is found: the competitive forces acting in the gasoline sector are not bounded within a local market but they spill over across local markets. Micro-territorial variables turn out to have a sizeable influence on prices, particularly the real estate value. When these variables are added to the model, the strength of spatial interaction weakens. This suggests that including micro-territorial variables in the empirical specification strongly contributes to explain the variation of gasoline prices and to accurately detect the spatial dependence.

Suggested Citation

  • Bergantino, Angela Stefania & Capozza, Claudia & Intini, Mario, 2018. "Empirical investigation of retail gasoline prices," Working Papers 18_4, SIET Società Italiana di Economia dei Trasporti e della Logistica.
    • Handle: RePEc:sit:wpaper:18_4
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    References listed on IDEAS

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    Cited by:

    1. Frederik von Waldow & Heike Link, 2024. "Spatial Competition and Pass-through of Fuel Taxes: Evidence from a Quasi-natural Experiment in Germany," Discussion Papers of DIW Berlin 2086, DIW Berlin, German Institute for Economic Research.
    2. Bergantino, Angela Stefania & Intini, Mario & Perdiguero, Jordi, 2020. "Pay cycles and fuel price: a quasi experimental approach," The Warwick Economics Research Paper Series (TWERPS) 1288, University of Warwick, Department of Economics.
    3. Korff, Alex, 2021. "Competition on the fast lane: The price structure of homogeneous retail gasoline stations," DICE Discussion Papers 359, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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