Quotation Weiss, Christoph, Koch, Birgit, Loy, Jens-Peter, Steinhagen, Carsten . 2018. Price Transmission and Local Market Power: Empirical Evidence from the Austrian Gasoline Market. Applied Economics. 50 (53), 5728-5746.


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Abstract

We analyse the impact of local market power on price margins and different dimensions of price adjustment dynamics (speed and asymmetry of price transmission) using data for a large number of individual gasoline stations in Austria. Specific attention is paid to threshold effects in price adjustment. Our results clearly suggest that the speed of price transmission between the Brent crude oil index and retail diesel prices is higher in a more competitive environment. While evidence on the relationship between local market power and asymmetries in the speed of price adjustment is mixed, our findings regarding asymmetries in price thresholds are clear: in regions where competition from neighbouring rivals is weak and/or consumers’ price elasticity of demand is low (stations located on the highway), positive thresholds significantly exceed negative ones, which corresponds to the ‘rockets and feathers phenomenon’. As expected, we observe that prices are lower in more competitive local markets.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Applied Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, VW-D
Language English
Title Price Transmission and Local Market Power: Empirical Evidence from the Austrian Gasoline Market
Volume 50
Number 53
Year 2018
Page from 5728
Page to 5746
Reviewed? Y
URL https://www.tandfonline.com/doi/abs/10.1080/00036846.2018.1488063
DOI http://dx.doi.org/10.1080/00036846.2018.1488063
Open Access N
Open Access Link https://www.tandfonline.com/doi/abs/10.1080/00036846.2018.1488063
JEL D4, L11, R32

Associations

People
Weiss, Christoph (Details)
Koch, Birgit (Former researcher)
Loy, Jens-Peter (Former researcher)
External
Steinhagen, Carsten (Universität Kiel, Germany)
Organization
Institute for Economic Policy and Industrial Economics IN (Details)
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