Abstract
This article attempts to investigate the issue of asymmetries in the transmission of shocks to input prices and exchange rate onto the wholesale and retail price of gasoline respectively. For this purpose, we utilise the error-correction methodology in the Greek gasoline market. The sample consists of monthly data covering the period of January 1988 to June 2006. We also try to analyse by using impulse response functions the effect of competition on the dynamic adjustment of gasoline price to which has been paid scant attention in the past. The results favour the common perception that retail gasoline prices respond asymmetrically to cost increases and decreases both in the long and the short-run. At the wholesale segment, there is a symmetric response of the spot prices of gasoline towards the adjustment to the short-run responses of the exchange rate. Lastly, after the deregulation, wholesale prices of gasoline tend to gradually restore equilibrium triggered by a price shock compared to the regulated period.
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Acknowledgements
The work undertaken has greatly benefited from the constructive comments and suggestions of four anonymous referees on an earlier version of the paper. The author wishes to express his deep gratitude to them. Any remaining errors and omissions belong to the author.
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Polemis, M.L. Competition and price asymmetries in the Greek oil sector: an empirical analysis on gasoline market. Empir Econ 43, 789–817 (2012). https://doi.org/10.1007/s00181-011-0507-7
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DOI: https://doi.org/10.1007/s00181-011-0507-7