International dispersion of retail diesel fuel prices and the estimation of normal price values

Vladimir Kossov and Elena Kossova ()

HSE Working papers from National Research University Higher School of Economics

Abstract: For the large majority of goods, the price dispersion between countries does not exceed 1:10. Diesel fuel stands out, with a dispersion which exceeds 1:100. Given a constant oil price the difference in diesel fuel prices between countries is caused by the different taxes. The average share of taxes in the price determines the normal price. An estimation of the normal price of diesel fuel is made using an econometric model (using 79 countries, 1998-2008 by even years). Of greatest interest to economic policy are normal prices for countries with economies in transition and developing countries. This paper is organized as follows. In the introduction a definition of the term "normal price" and why it is important are presented. The first chapter is devoted to the notion of "price level" both international and national. The normal price is calculated using an econometric model. The estimation of the normal price of goods is determined by the international component and deviation of the normal price by the national one. In the second chapter the results of evaluating the parameters of the econometric model and the values of normal prices are given. In the third chapter price deviations in Russia and Kazakhstan are discussed and it is concluded that they have reached the maximum value, above which mass protests may result

Keywords: budget revenue; diesel fuel price; motor fuel tax; mass protests; normal price; oil rent; price level (search for similar items in EconPapers)
JEL-codes: C23 D49 E37 Q48 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2013
New Economics Papers: this item is included in nep-ene and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in WP BRP Series: Economics / EC, March 2013, pages 1-55

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