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EDGEWORTH PRICE CYCLES: EVIDENCE FROM THE TORONTO RETAIL GASOLINE MARKET

EDGEWORTH PRICE CYCLES: EVIDENCE FROM THE TORONTO RETAIL GASOLINE MARKET I exploit a new station‐level, twelve‐hourly price dataset to examine the strong retail price cycles in the Toronto gasoline market. The cycles appear similar to theoretical Edgeworth Cycles: strongly asymmetric, tall, rapid, and highly synchronous across stations. I test a series of predictions made by the theory about how firm behaviors would differentially evolve over the path of a cycle. The evidence is consistent with the existence of Edgeworth Cycles and inconsistent with competing hypotheses. While the cycles are an interesting phenomenon for study in their own right, the evidence has important policy and welfare implications. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Industrial Economics Wiley

EDGEWORTH PRICE CYCLES: EVIDENCE FROM THE TORONTO RETAIL GASOLINE MARKET

The Journal of Industrial Economics , Volume 55 (1) – Mar 1, 2007

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References (35)

Publisher
Wiley
Copyright
Copyright © 2007 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0022-1821
eISSN
1467-6451
DOI
10.1111/j.1467-6451.2007.00303.x
Publisher site
See Article on Publisher Site

Abstract

I exploit a new station‐level, twelve‐hourly price dataset to examine the strong retail price cycles in the Toronto gasoline market. The cycles appear similar to theoretical Edgeworth Cycles: strongly asymmetric, tall, rapid, and highly synchronous across stations. I test a series of predictions made by the theory about how firm behaviors would differentially evolve over the path of a cycle. The evidence is consistent with the existence of Edgeworth Cycles and inconsistent with competing hypotheses. While the cycles are an interesting phenomenon for study in their own right, the evidence has important policy and welfare implications.

Journal

The Journal of Industrial EconomicsWiley

Published: Mar 1, 2007

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