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Taxation and the asymmetric adjustment of selected retail energy prices in the UK

Matthew Greenwood-Nimmo and Yongcheol Shin

Economics Letters, 2013, vol. 121, issue 3, 411-416

Abstract: This paper investigates the adjustment of the prices of four key petroleum products in the UK following changes in the price of crude oil. We find significant evidence that the pre-tax prices of diesel, kerosene, and gas oil adjust more rapidly in an upward than a downward direction, but that the pre-tax price of unleaded petrol adjusts symmetrically. However, these patterns are obscured at the pump once one accounts for fuel duty and value-added tax, raising the possibility that firms can use the tax system to conceal rent-seeking behaviour.

Keywords: Nonlinear ARDL (NARDL); Asymmetric gasoline price adjustment; Rockets and feathers hypothesis (search for similar items in EconPapers)
JEL-codes: C22 H23 Q40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:121:y:2013:i:3:p:411-416

DOI: 10.1016/j.econlet.2013.09.020

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