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Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

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  • Yufeng Chen

    (Center for Studies of Modern Business, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Economics, Zhejiang Gongshang University, Hangzhou 310018, China)

  • Guobin Huang

    (School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China)

  • Lihua Ma

    (School of Economics, Zhejiang Gongshang University, Hangzhou 310018, China)

Abstract

This paper employs an asymmetric error-correction model (AECM), and uses monthly data on wholesale prices of gasoline and diesel products in China and international crude oil prices from February 2006 to October 2013 to examine whether China’s gasoline and diesel prices adjust asymmetrically to international crude oil price changes. Our empirical results suggest that increases and decreases in international oil prices have asymmetric effects on both wholesale prices of gasoline and diesel fuel in China, and that both increases and decreases in international oil prices have a greater effect on diesel prices than on gasoline prices in China. If there is no change in the maximum retail price, the asymmetry results from the transmission of wholesale prices in China with international oil prices. However, if there is a change in maximum retail prices, both international oil prices and maximum retail prices cause the asymmetry.

Suggested Citation

  • Yufeng Chen & Guobin Huang & Lihua Ma, 2017. "Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices," Sustainability, MDPI, vol. 9(3), pages 1-19, March.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:3:p:381-:d:92312
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    Cited by:

    1. Gaolu Zou & Kwong Wing Chau, 2020. "Effects of International Crude Oil Prices on Energy Consumption in China," Energies, MDPI, vol. 13(15), pages 1-17, July.
    2. Liexun Yang & Peng Zhou & Ning Zhang, 2017. "A Review of Low-Carbon Transformation and Energy Innovation Issues in China," Sustainability, MDPI, vol. 9(7), pages 1-6, July.
    3. He, Yongda & Lin, Boqiang, 2023. "Is market power the cause of asymmetric pricing in China's refined oil market?," Energy Economics, Elsevier, vol. 124(C).

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