Open AccessAn Empirical Study of Asymmetric Pricing in Retail Gasoline and Diesel Markets in Taiwan, Japan, South Korea, and Singapore
Author(s) -
KuoWei Chou,
Chin-Yuen Chang,
Fei Hu
Publication year - 2013
Publication title -
international journal of financial research
Language(s) - English
Resource type - Journals
eISSN - 1923-4031
pISSN - 1923-4023
DOI - 10.5430/ijfr.v4n3p35
Subject(s) - diesel fuel , gasoline , economic interventionism , oligopoly , government (linguistics) , economics , intervention (counseling) , agricultural economics , econometrics , business , microeconomics , automotive engineering , engineering , cournot competition , waste management , psychology , linguistics , philosophy , psychiatry , politics , law , political science
This study estimated retail price adjustments in the gasoline and diesel markets of Taiwan, Japan, South Korea, and Singapore using monthly data between 2004M1 and 2012M6. An asymmetric error correction model (ECM) was employed as a framework and the results showed that asymmetric adjustments in retail gasoline and diesel prices are common, and that the adjustments, which quickly and obviously responded to cost reductions, are a type of politico-economic asymmetry. This finding differs from the results of numerous international studies. In other words, although gasoline and diesel markets are evident oligopolies, the government’s intervention behavior appears to control the gasoline and diesel price adjustments of the 4 East Asian countries evaluated in this study (i.e., Taiwan, Japan, South Korea, and Singapore)