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Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market

Author

Listed:
  • John Michael Ian S. Salas

    (University of the Philippines School of Economics)

Abstract
This paper employs ordered probit, partial adjustment, and vector error correction models to characterize price adjustments in the Philippine retail gasoline market since its deregulation. It finds that pricing decisions of oil firms depend significantly on eight weeks of previous changes in crude cost. It shows that the speed of adjustment of retail prices to its long-run equilibrium relation with crude cost has been following an accelerating trend but is vulnerable to intervening factors. Lastly, it provides empirical evidence that pump prices respond quicker and more fully to increases in crude cost rather than to decreases.

Suggested Citation

  • John Michael Ian S. Salas, 2002. "Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market," Industrial Organization 0209001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0209001
    Note: Type of Document - pdf; pages: 44; figures: 11 figures, 18 tables. First Prize, Best Undergraduate Paper
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0209/0209001.pdf
    Download Restriction: no
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    References listed on IDEAS

    as
    1. Severin Boreinstein & Andrea Shepard, 1996. "Dynamic Pricing in Retail Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 429-451, Autumn.
    2. Severin Borenstein & Andrea Shepard, 2002. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 116-139, Spring.
    3. Godby, Rob & Lintner, Anastasia M. & Stengos, Thanasis & Wandschneider, Bo, 2000. "Testing for asymmetric pricing in the Canadian retail gasoline market," Energy Economics, Elsevier, vol. 22(3), pages 349-368, June.
    4. Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
    5. Jochen Meyer & Stephan von Cramon‐Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611, November.
    6. Stephen P. A. Brown & Mine K. Yücel, 2000. "Gasoline and crude oil prices: why the asymmetry?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q3, pages 23-29.
    7. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 305-339.
    8. repec:bla:scandj:v:102:y:2000:i:1:p:101-21 is not listed on IDEAS
    9. U, Peter Lee, 2000. "Competition Policy in the Philippine Downstream Oil Industry," Discussion Papers PASCN DP 2000-14, Philippine Institute for Development Studies.
    10. Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
    11. Marcus Asplund & Rickard Eriksson & Richard Friberg, 2000. "Price Adjustments by a Gasoline Retail Chain," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 101-121, March.
    12. Nathan S. Balke & Stephen P. A. Brown & Mine K. Yücel, 1998. "Crude oil and gasoline prices: an asymmetric relationship?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 2-11.
    13. Jeffrey D. Karrenbrock, 1991. "The behavior of retail gasoline prices: symmetric or not?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 19-29.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. María Torrado & Álvaro Escribano, 2020. "European gasoline markets: price transmission asymmetries in mean and variance," Applied Economics, Taylor & Francis Journals, vol. 52(42), pages 4621-4638, September.
    2. Perdiguero-García, Jordi, 2013. "Symmetric or asymmetric oil prices? A meta-analysis approach," Energy Policy, Elsevier, vol. 57(C), pages 389-397.
    3. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.
    4. Bakytzhanova Zhuldyz, 2005. "Asymmetric fuel pricing in transition economies: The case of Moscow," EERC Working Paper Series 05-18e, EERC Research Network, Russia and CIS.
    5. Aldaba, Rafaelita M., 2003. "Regulatory Policies and Reforms in the Power and Downstream Oil Industries," Discussion Papers DP 2003-16, Philippine Institute for Development Studies.

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    More about this item

    Keywords

    gasoline; price asymmetry; price adjustment; Philippines;
    All these keywords.

    JEL classification:

    • L - Industrial Organization

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