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Gasoline Price Wars: Spatial Dependence Awakens

Konstantinos Eleftheriou () and Michael Polemis ()

MPRA Paper from University Library of Munich, Germany

Abstract: We build an Asymmetric Spatial Error Correction Model (ASpECM) to investigate the role of spatial dependence at the retail gasoline price adjustment mechanism. We find evidence that the symmetric price pattern is fully reversed when we account for spatial spillover effects, indicating that retail prices adjust more rapidly in an upward than a downward direction. This finding raises the possibility that retailers are more likely to engage in anti-competitive practices which may be ignored when the regulators bypass the role of spatial dependence.

Keywords: ASpECM; Spatial dependence; Asymmetric gasoline price adjustment (search for similar items in EconPapers)
JEL-codes: C23 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene, nep-tre and nep-ure
Date: 2016-02-16
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:70037

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