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Station level gasoline demand in an Australian market with regular price cycles

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  • Wang, Zhongmin

Abstract

Regular and frequent gasoline price cycles are being observed in many Australian and Canadian markets. What is driving these price cycles has been the subject of academic studies and government investigations. The existing explanations for these price cycles all rely on the presumption that drivers are intensively sensitive to gasoline price differentials at the station level. However, no empirical evidence exists in the literature to support this presumption. This paper provides the first piece of empirical evidence. This paper uses a unique price and quantity data set and novel instruments to estimate the station level gasoline demand in the cycling market of Perth, Australia. The elasticity estimates confirm that drivers in the Perth area are indeed very sensitive to gasoline price differentials.

Suggested Citation

  • Wang, Zhongmin, 2009. "Station level gasoline demand in an Australian market with regular price cycles," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 1-17.
    • Handle: RePEc:ags:aareaj:161985
    DOI: 10.22004/ag.econ.161985
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    References listed on IDEAS

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    Cited by:

    1. Nguyen-Ones, Mai & Steen, Frode, 2018. "Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon?," Discussion Paper Series in Economics 6/2018, Norwegian School of Economics, Department of Economics.
    2. Nguyen-Ones , Mai & Steen, Frode, 2018. "Market Power in Retail Gasoline Markets," Discussion Paper Series in Economics 21/2019, Norwegian School of Economics, Department of Economics, revised 01 Jul 2019.
    3. Michael D. Noel, 2019. "Calendar synchronization of gasoline price increases," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 355-370, April.
    4. Noel, Michael D. & Chu, Lanlan, 2015. "Forecasting gasoline prices in the presence of Edgeworth Price Cycles," Energy Economics, Elsevier, vol. 51(C), pages 204-214.
    5. Wein, Thomas, 2021. "Why abandoning the paradise? Stations incentives to reduce gasoline prices at first," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242362, Verein für Socialpolitik / German Economic Association.
    6. David P. Byrne & Nicolas de Roos, 2019. "Learning to Coordinate: A Study in Retail Gasoline," American Economic Review, American Economic Association, vol. 109(2), pages 591-619, February.
    7. Nicolas de Roos & Hajime Katayama, 2013. "Gasoline Price Cycles Under Discrete Time Pricing," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 175-193, June.
    8. Justus Haucap & Ulrich Heimeshoff & Manuel Siekmann, 2017. "Fuel Prices and Station Heterogeneity on Retail Gasoline Markets," The Energy Journal, , vol. 38(6), pages 81-104, November.
    9. Arezoo Ghazanfari & Armin Razmjoo, 2022. "The Effect of Market Isolation on Competitive Behavior in Retail Petrol Markets," Sustainability, MDPI, vol. 14(13), pages 1-33, July.
    10. Zhongmin Wang, 2009. "(Mixed) Strategy in Oligopoly Pricing: Evidence from Gasoline Price Cycles Before and Under a Timing Regulation," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 987-1030, December.
    11. Astrid Fliessbach & Rico Ihle, 2020. "Cycles in cattle and hog prices in South America," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1167-1183, October.
    12. Thomas Wein, 2020. "Why abandoning the paradise? Stations incentives to reduce gasoline prices at first," Working Paper Series in Economics 394, University of Lüneburg, Institute of Economics.
    13. Hurtado, Carlos & González, Julia, 2024. "Price differences within retail gasoline markets," Energy Economics, Elsevier, vol. 133(C).
    14. Neukirch Arne & Wein Thomas, 2019. "Price Gouging at the Pump? The Lerner Index and the German Fuel Market," Review of Economics, De Gruyter, vol. 70(2), pages 157-192, August.
    15. Noel, Michael D., 2015. "Do Edgeworth price cycles lead to higher or lower prices?," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 81-93.
    16. Рубинштейн Александр Яковлевич, "undated". "Ранжирование Российских Экономических Журналов: Научный Метод Или «Игра В Цыфирь»? [Ran Ranking of Russian Economic Journals: The Scientific Method or “Numbers Game”?]," Working papers a:pru175:ye:2016:1, Institute of Economics.
    17. Noel, Michael D., 2012. "Edgeworth Price Cycles and intertemporal price discrimination," Energy Economics, Elsevier, vol. 34(4), pages 942-954.
    18. Hashimi, Hasham & Jeffreys, Ian, 2016. "The impact of lengthening petrol price cycles on consumer purchasing behaviour," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 130-137.
    19. Melissa Linder, 2018. "Price cycles in the German retail gasoline market - Competition or collusion?," Economics Bulletin, AccessEcon, vol. 38(1), pages 593-602.

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    Demand and Price Analysis;

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