EconPapers    
Economics at your fingertips  
 

The pricing of gasoline grades and the third law of demand

R. Morris Coats, Gary M. Pecquet and Leon Taylor ()
Additional contact information
Gary M. Pecquet: Shenandoah University

Microeconomics from University Library of Munich, Germany

Abstract: Alchian and Allen’s “third law of demand” states that as a fixed cost increases by the same amount for low- and high-quality goods, the ratio of the prices of high- to low-quality goods will fall and the quantity demanded of high quality goods relative to low quality goods will increase. We examine the more general hypothesis by estimating the ratio of the quantities of sales of premium to regular grade gasoline using the ratio of premium to regular prices, controlling for supply and demand factors. We find moderate evidence for the more general hypothesis.

Keywords: Third Law of Demand; Price Ratios; Gasoline Grades (search for similar items in EconPapers)
JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2005-06-18
New Economics Papers: this item is included in nep-com and nep-mic
Note: Type of Document - pdf; pages: 17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0506/0506006.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0506006

Access Statistics for this paper

More papers in Microeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

 
Page updated 2022-06-30
Handle: RePEc:wpa:wuwpmi:0506006