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Analysis of Asymmetry in Slovak Gasoline and Diesel Retail Market

Karol Szomolányi, Martin Lukáčik and Adriana Lukáčiková

A chapter in Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 12-14 September 2019, 2019, pp 359-366 from IRENET - Society for Advancing Innovation and Research in Economy, Zagreb

Abstract: In this paper we examine if Slovak retail gasoline and diesel prices respond more quickly when crude oil price rises rather than when it decreases. The error correction model with irreversible behaviour of explanatory variables is considered to be basic tool for the analysis of asymmetric retail price reaction of gasoline and diesel. The explanatory variable is divided into two variables, the positive and the negative differences implying a price increase and a price decrease. Due to the link between the gasoline and diesel markets, we assume a common co-integration relationship. Therefore, we also estimate vector error correction model in our analysis. The both model approaches reject expected asymmetry in the retail price reactions on crude oil changes.

Keywords: gasoline and diesel retail price research; irreversible model; cointegration; rockets and feathers (search for similar items in EconPapers)
JEL-codes: L71 C22 C52 (search for similar items in EconPapers)
Date: 2019
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