 Dynamics of the gas retail market under China's price cap regulationJian Cui, Hanfang Yang, Yifan Wang and Caili Yang Energy Policy, 2023, vol. 174, issue C Abstract: To stabilise gas prices and safeguard consumer interests, China introduced a new price cap regulation for the gas retail market in 2013. This study is the first to evaluate the impact of this price cap regulation on the dynamics of retail gas prices. By using an asymmetric error correction model and Markov-switching regression based on daily gas-station-level price data from Inner Mongolia, China, we establish that retail prices respond asymmetrically to price caps, rather than crude oil prices, implying that price caps may serve as focal points for gas stations to collude tacitly. Additionally, the cyclic nature of retail prices is not obvious under the price cap regulation, which provides some evidence for the buffering effect of price caps on price cycles. Finally, we establish that price cycle characteristics differ by gas station and brand. These results may provide a better understanding of retail price dynamics in a price-cap-regulated market and guide policymakers and planners in optimising regulatory policies. Keywords: Price cycles; Price cap regulation; Asymmetry; Gas retail market (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:174:y:2023:i:c:s0301421523000095 DOI: 10.1016/j.enpol.2023.113424 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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