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The dynamics of daily retail gasoline prices
Author(s) -
Davis Michael C.
Publication year - 2007
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1372
Subject(s) - gasoline , economics , microeconomics , dynamics (music) , business , industrial organization , engineering , waste management , physics , acoustics
Previous research has analyzed the behavior of retail gasoline stations in how they adjust their prices. In this paper we analyze the daily movements in prices of four retail gasoline stations located in Newburgh, New York. We find some evidence to support the notion that the behavior is explained by menu costs. There is substantial evidence that the firms adjust their prices asymmetrically, being more inclined to increase than to decrease prices. We conclude that the pricing behavior is being determined by a combination of search costs for the consumers and menu costs for the producers. Copyright © 2007 John Wiley & Sons, Ltd.