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What affects intranational price dispersion?: The case of Japanese gasoline prices

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  • Tsuruta, Yoshitaka

Abstract

The empirical analysis on price dispersion, as described by [Engel, C., Rogers, J.H., 1996. How wide is the Border? American Economic Review 86, 1112-1125], is to investigate the determinants of international relative price fluctuations. Using data from the Japanese gasoline industry, we investigate the implications of the market structure for intranational price dispersion. Our empirical results suggest that: (1) in conformity with the double marginalization model, the dispersion of the wholesale gasoline price is affected by the relative retailer's margin and (2) the dispersion of the retail gasoline margin is influenced by the degree of competition and advertising. Considering these results synthetically, the retail price dispersion is amplified by the retail market structure both directly and indirectly.

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  • Tsuruta, Yoshitaka, 2008. "What affects intranational price dispersion?: The case of Japanese gasoline prices," Japan and the World Economy, Elsevier, vol. 20(4), pages 563-584, December.
    • Handle: RePEc:eee:japwor:v:20:y:2008:i:4:p:563-584
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    2. Satoh, Eiji & Iwase, Ryusuke & Kamakura, Keita & Sawasato, Shinji & Tominaga, Saki, 2018. "Consumer search costs, geographical concentration, and retail gasoline pricing: Evidence from inland Japan," Japan and the World Economy, Elsevier, vol. 45(C), pages 1-8.
    3. Juan Jiménez & Jordi Perdiguero, 2012. "Does Rigidity of Prices Hide Collusion?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 223-248, November.
    4. Thomas M. Fullerton & Alan Jimenez & Yu Liu & Adam G. Walke, 2015. "Gasoline price predictability in a border metropolitan economy," Applied Economics Letters, Taylor & Francis Journals, vol. 22(6), pages 499-502, April.
    5. Arezoo Ghazanfari, 2022. "What Drives Petrol Price Dispersion across Australian Cities?," Energies, MDPI, vol. 15(16), pages 1-24, August.

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