Non-linearities in mark-up on costs

Szymon Wlazlowski, Jane Binner, Monica Giulietti and Nathan Joseph

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract This study employs an error-correction SETAR model to analyse the non-linearities in the behaviour of the mark-up on costs charged by the filling stations in the New York metropolitan area. While usual price transmission gained significant attention in the literature, the mark-up portion of the price has not been analysed to date. The results indicate that the adjustment to mark-ups to their long run values is non-linear, but the speeds with they adjust to their long-run values are equal across regimes for two out of three series analysed. For one of the series the adjustment is beneficial for the end consumers such that prices fall faster than they rise. The findings are somewhat surprising, indicating that there is no need for government intervention in the NY petroleum market.

Keywords: Rockets and feathers; asymmetry; petroleum; SETAR (search for similar items in EconPapers)
JEL-codes: C52 D40 L11 Q40 (search for similar items in EconPapers)
Date: 2006-11-21
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Published in Aston Working Papers 2006 (2006): pp. 1-21

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1468

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