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http://dx.doi.org/10.15266/KEREA.2016.25.4.495

Rockets and Feathers Across Multi-Gasoline Products: Evidence from Error Correction Model  

Chang, Yenjae (The School of Economic Science, Washington State University)
Kim, Dae-Wook (Department of Economics, Soongsil University)
Publication Information
Environmental and Resource Economics Review / v.25, no.4, 2016 , pp. 495-516 More about this Journal
Abstract
This study empirically examines how asymmetric price adjustment of the retail gas price happens differently for various oil products, such as high-grade gasoline, regular gasoline, and diesel, by employing asymmetric error correction model within weekly data set from 2010~2015. Our estimation results show that the price adjustment, across the all oil types, predicated on shifting crude oil and wholesale oil prices is asymmetric. In addition, the duration of asymmetry was shorter in high-grade gasoline case than in other oil types. This took place by rapid price adjustment of high-grade gasoline price when faced with both cost increases and decreases, in comparison with regular gasoline and diesel cases. There results were attributed by characteristics of the consumer group and a high retail-wholesale margin of high-grade gasoline.
Keywords
Asymmetric Responses; Asymmetric Error Correction Model; High-grade Gasoline; Regular gasoline; Diesel;
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