Price Cycles and Price Leadership in Gasoline Markets: New Evidence from Canada

David Byrne and Roger Ware ()

No 1124, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper studies the determinants of Edgeworth Cycles, price leadership and coordination in retail gasoline markets using daily station-level price data for 110 markets in Ontario, Canada for 2007-2008. We find an “inverse-U” relationship between markets’ propensity to exhibit price cycles and their size. More concentrated markets are less likely to exhibits cycles and we highlight regional clustering among cycling and non-cycling markets. Within cycling markets, we find brands’ stations (Esso, Shell,Petro-Canada, Sunoco) lead price jumps and coordinate market prices, while independents (Ultramar, Pioneer, Olco, MacEwen) aggressively undercut prices over the cycle.

Keywords: Retail gasoline prices; Edgeworth Cycles; Price leadership; Coordination (search for similar items in EconPapers)
JEL-codes: D22 L11 L9 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1124

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