DO ROCKETS RISE FASTER AND FEATHERS FALL SLOWER IN AN ATMOSPHERE OF LOCAL MARKET POWER? EVIDENCE FROM THE RETAIL GASOLINE MARKET -super-*
Jeremy A. Verlinda
Journal of Industrial Economics, 2008, vol. 56, issue 3, 581-612
This study explores the possibility that local market power influences the observed asymmetric relationship between changes in wholesale gasoline costs and changes in retail gasoline prices. I exploit an original data set of weekly gas station prices in Southern California from September, 2002 to May, 2003, and take advantage of detailed station and local market level characteristics to determine the extent to which geographic and product differentiation influence price response asymmetry. I find that brand identity, proximity to rival stations and local market features and demographics each influence a station's predicted price-response asymmetry. Copyright 2008 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics. No claim to original US government works.
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