Asymmetric behaviour and the 9-ending pricing of retail gasoline

Mark Holmes () and Jesus Otero

Energy, 2023, vol. 263, issue PC

Abstract: Using daily unleaded gasoline data for almost the totality of Western Australian retail outlets over twenty years, we find that retail prices are most rigid when they are 9-ending as opposed to other price endings. Upward rigidity from a 9-ending retail price is found to be greater than downward rigidity in terms of a lower number of price movements. Irrespective of whether or not a 9-ending price is being charged, an upward gasoline price movement is likely, in absolute terms, to lead to a larger size of price change than a downward movement. In sharp contrast, we find that wholesale gasoline prices are not characterised in such ways and that irrespective of whether or not taxes are included, there is uniformity across the frequency distribution of price endings. The presence of 9-ending pricing affects the nonlinear response of retail gasoline prices to wholesale price movements.

Keywords: Retail gasoline; Price setting; Asymmetries; Region (search for similar items in EconPapers)
JEL-codes: C33 D22 L11 Q41 Q47 R11 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:263:y:2023:i:pc:s0360544222026524

DOI: 10.1016/j.energy.2022.125766

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