Do pump prices really follow Edgeworth cycles? Evidence from the German retail fuel market
Most of the literature on retail fuel markets find high-frequency and asymmetric price cycles. This is typically explained by the model of Edgeworth price cycles. A key element of this model is that prices fall to marginal costs during a cycle. It seems challenging to address this assumption empiric...
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| Publié dans: | MAGKS - Joint Discussion Paper Series in Economics (Band 13-2019) |
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| Auteur principal: | |
| Format: | Article |
| Langue: | anglais |
| Publié: |
Philipps-Universität Marburg
2019
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| Sujets: | |
| Accès en ligne: | Texte intégral en PDF |
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| Résumé: | Most of the literature on retail fuel markets find high-frequency and asymmetric price cycles. This is typically explained by the model of Edgeworth price cycles. A key element of this model is that prices fall to marginal costs during a cycle. It seems challenging to address this assumption empirically. However, I use a natural experiment in the German fuel market to analyze the effects of an external cost shock. I find strong evidence that prices do not fall to marginal costs. This is not in line with Edgeworth cycles and thus, should be taken into account when analyzing fuel markets. |
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| Description matérielle: | 13 Seiten |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0608 |