TY - JOUR
T1 - Asymmetric behaviour and the 9-ending pricing of retail gasoline
AU - Holmes, Mark J.
AU - Otero, Jesús
N1 - Publisher Copyright:
© 2022 Elsevier Ltd
PY - 2022/10/19
Y1 - 2022/10/19
N2 - Using daily unleaded gasoline data for almost the totality of Western Australian retail outlets over twenty years, we find that retail prices are most rigid when they are 9-ending as opposed to other price endings. Upward rigidity from a 9-ending retail price is found to be greater than downward rigidity in terms of a lower number of price movements. Irrespective of whether or not a 9-ending price is being charged, an upward gasoline price movement is likely, in absolute terms, to lead to a larger size of price change than a downward movement. In sharp contrast, we find that wholesale gasoline prices are not characterised in such ways and that irrespective of whether or not taxes are included, there is uniformity across the frequency distribution of price endings. The presence of 9-ending pricing affects the nonlinear response of retail gasoline prices to wholesale price movements.
AB - Using daily unleaded gasoline data for almost the totality of Western Australian retail outlets over twenty years, we find that retail prices are most rigid when they are 9-ending as opposed to other price endings. Upward rigidity from a 9-ending retail price is found to be greater than downward rigidity in terms of a lower number of price movements. Irrespective of whether or not a 9-ending price is being charged, an upward gasoline price movement is likely, in absolute terms, to lead to a larger size of price change than a downward movement. In sharp contrast, we find that wholesale gasoline prices are not characterised in such ways and that irrespective of whether or not taxes are included, there is uniformity across the frequency distribution of price endings. The presence of 9-ending pricing affects the nonlinear response of retail gasoline prices to wholesale price movements.
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U2 - 10.1016/j.energy.2022.125766
DO - 10.1016/j.energy.2022.125766
M3 - Research Article
AN - SCOPUS:85140444928
SN - 0360-5442
VL - 263
SP - 1
JO - Energy
JF - Energy
IS - C
M1 - 125766
ER -