Asymmetric pass-through and competition

Christos Genakos, Blair Yuan Lyu and Mario Pagliero

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the retail price pass-through of four major tax changes in petroleum products using daily pricing data from gas stations on small Greek islands. We find that (i) the pass-through of the tax hikes is five times higher than for the tax decrease, (ii) the pass-through of the tax hikes increases with competition, while that of the tax decrease does not, (iii) there is significant asymmetry in the speed of price adjustments, and,(iv) the asymmetric price adjustment cannot be explained by tacit collusion, instead the evidence suggests that search is the most plausible explanation.

Keywords: pass-through; rockets and feathers; tax incidence; gasoline market; market structure; competition (search for similar items in EconPapers)
JEL-codes: H22 L1 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-08-30
New Economics Papers: this item is included in nep-com and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126788

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