How do Co nsumers Respond to Gasoline

David Byrne and Gordon Leslie

No 1176, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper empirically studies how consumers respond to retail gasoline price cycles. Our analys is uses new station-level price data from local markets in Ontario, Canada, and a unique market-level measure of consumer responsiveness based on web traffic from gasoline price reporting websites. We first document how stations use coordinated pricing strategies that give rise to large daily changes in price levels and dispersion in cycling gasoline markets. We then show consumer responsiveness exhibits cycles that move with these price fluctuations. Through a series of tests we further show that forward-looking stockpiling behavior by consumers plays a central role in generating these patterns.

Keywords: Retail gasoline price cycles; Dynamic demand; Consumer search (search for similar items in EconPapers)
JEL-codes: D22 L11 L9 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2013
New Economics Papers: this item is included in nep-com, nep-ene, nep-ger, nep-mkt and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1176

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