ASYMMETRIC DYNAMIC PRICING IN A LOCAL GASOLINE RETAIL MARKET*

Felipe Balmaceda () and Paula Soruco

Journal of Industrial Economics, 2008, vol. 56, issue 3, 629-653

Abstract: Asymmetric‐price adjustment is a common phenomenon in many markets around the world, particularly in retail gasoline markets. This paper studies the existence of this phenomenon in the retail gasoline market in the city of Santiago, Chile, using a data set of weekly gas station prices that covers a period of almost four years. We found that prices adjust asymmetrically, and the asymmetry is different for branded gas stations and unbranded stations. In addition, we found that the asymmetry for high‐margin stations is statistically equivalent to that for low‐margin stations. This evidence is suggestive of collusion as a rationale for the asymmetric pricing policy observed.

Date: 2008
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