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How do Consumers Respond to Gasoline Price Cycles?

David P. Byrne, Gordon W. Leslie, and Roger Ware
Authors registered in the RePEc Author Service: David P. Byrne () and Gordon William Leslie ()

The Energy Journal, 2015, vol. Volume 36, issue Number 1

Abstract: This paper empirically studies how consumers respond to retail gasoline price cycles. Our analysis 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 find that forward-looking stockpiling behavior by consumers plays a central role in generating these patterns.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2015
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