edgeworth price cycles cost based pricing and sticky pricing in retail gasoline markets abstract this paper examines dynamic pricing behavior in canadian retail gasoline markets i find three distinct pricing patterns cost based pricing sticky pricing and sharp asymmetric retail price cycles that resemble the edgeworth cycles of maskin and tirole 1988 i use a markov switching regression to estimate the prevalence of the regimes and the structural characteristics of the cycles themselves i find cycles are more prevalent when there are more small firms and are accelerated and amplified with very many small firms in markets with few small firms sticky pricing dominates the findings are consistent with the theory of edgeworth cycles

unemployment rates and political outcomes an incentive for manufacturing a political business cycle in recent years the interdependence of politics and economics has received an increasing amount of attention by both economists and political scientists the explanation for this interest lies in the rediscovery of political economy and may be at least partly due to the recent experiences that governmental advisors have had with simultaneously increasing inflation and unemployment conventional macroeconomic approaches have failed to pin point causes for the stagflation and to provide methods for solving the problem the traditional economic policies may have failed in part because these traditional solutions were simply not plausible in the political environments in which they were proposed it is the intent of a growing body of work to develop macromodels with endogenous political sectors the inference made in this literature is that 1 the economy can be manipulated or affected by a political sector and that 2 there is an incentive for the political sector to manipulate the economy this literature has however just begun to formalize the interaction of the political and economic sectors and empirical work is virtually nonexistent the purpose of this paper is to present some evidence on these two inferences in section 1 the first inference is examined in section ii literature on which the first inference is based is reviewed and evidence on the possible incentive to create such a cycle is presented in section iii concluding remarks are offered

rockets and feathers understanding asymmetric pricing prices rise like rockets but fall like feathers this stylized fact of most markets is con rmed by many empirical studies in this paper i develop a model with competitive rms and rational partially informed consumers where such asymmetric response to costs by rms emerges naturally in contrast to public opinion and past work collusion is not necessary to explain such result using a rich dataset of retail gasoline prices i nd the observed price dispersion pattern to be consistent with the model s prediction

market structure and price adjustment in the u s wholesale gasoline markets abstract the issue of sticky prices in u s wholesale gasoline market is re examined allowing for the effect of market structure due to increased market concentration caused by mergers acquisitions and joint ventures which started in the late 1990s in the u s oil industry i investigate the effects of market structure on the pattern of price adjustment based on the notion that increased market concentration leads to downward price stickiness and asymmetric short run price adjustment in the transmission of crude price changes to wholesale gasoline price i find that market concentration has an insignificant asymmetric effect on the speed of price adjustment but a significant asymmetric effect on short run price adjustments in the response of wholesale gasoline prices to crude price shocks in three u s wholesale markets furthermore the signs on the coefficients of market concentration effects on price dynamics in the models support the assertion that increased market concentration leads to downward price stickiness in only one of the three markets examined overall the results indicate that market structure does not have a strong effect on the dynamics of price adjustment

causes for an asymmetric relation between the price of crude oil and refined petroleum products we revisit the issue of asymmetries in the relation between the price of crude oil and refined petroleum products in the united states an econometric analysis of monthly data indicates that the asymmetric relation between the price of crude oil and motor gasoline is generated by refinery utilization rates and inventory behavior the asymmetric relation between the price of crude oil and home heating oil probably is generated by contractual arrangements between retailers and consumers together these results imply that price asymmetries may be generated by efficient markets under these conditions there is little justification for policy interventions to reduce or eliminate price asymmetries in motor gasoline and home heating oil markets

dynamic optimization of political popularity in an empirical macroeconomic model we estimate a political popularity function for israel taking account of the effects of institutional and political changes on the structure of the function and then use this function in conjunction with a simple macroeconomic model of the israeli economy to calculate dynamic macroeconomic strategies which would have maximized the political popularity of three previous israeli governments we conclude that the dominant strategy was always to keep unemployment at the natural rate but that this strategy was optimally combined with either rising inflation close to elections for the earlier governments or with near zero inflation throughout the term for later governments

edgeworth price cycles and intertemporal price discrimination in a retail gasoline market exhibiting edgeworth price cycles prices change asymmetrically with many small decreases interrupted by occasional large increases the result is a de facto menu of prices from which consumers can choose based on exactly when they buy this article introduces four classes of purchase timing strategies designed to systematically shift consumer purchases towards the cycle troughs it shows in the study market of toronto canada the monetary gains to consumers from optimized timing strategies are as high as 3 9 markups earned from these consumers fall up to 82 in spite of the gains from timing strategies surprisingly few consumers use them evidence is presented that a main reason is that consumers are not well informed about the cycles policy implications are discussed

testing for asymmetric pricing in the canadian retail gasoline market abstract this paper applies a threshold regression model to test for asymmetric pricing in the retail gasoline market in canada using weekly data for the period january 1990 to december 1996 we present results for 13 canadian cities for both premium and regular gasoline within the context of an error correction model we test for the presence of asymmetric price behaviour using average changes in crude prices as well as various lags for the change in crude as possible thresholds we are unable to find any evidence to support this view

search with learning understanding asymmetric price adjustments in many retail markets prices rise faster than they fall we develop a model of search with learning to explain this phenomenon of asymmetric price adjustments by extending our static game analysis to the dynamic setting we demonstrate that asymmetric price adjustments arise naturally when a positive cost shock occurs all the searchers immediately learn the true state the search intensity and hence the prices fully adjust in the next period when a negative cost shock occurs it takes longer for nonsearchers to learn the true state and the search intensity increases gradually leading to slow falling of prices

a study of cartel stability the joint executive committee 1880 1886 this article employs weekly time series data on the joint executive committee railroad cartel from 1880 to 1886 to test empirically the proposition that observed prices reflected switches from collusive to noncooperative behavior an equilibrium model of dynamic oligopoly with asymmetric firms together with explicit functional form assumptions about costs and demand determines the estimating equations and stochastic structure of the econometric model the hypothesis that no switch took place so that price and quantity movements were solely attributable to exogenous shifts in the demand and cost functions is then tested against this alternative and rejected

testing a discrete switching disequilibrium model of the uk labour market this paper develops a test procedure for serial correlation for discrete switching disequilibrium models which include both an endogenous price adjustment equation and lagged dependent variables the tests are applied to a model of the u k labor market and the model is respecified in the light of the test results

political business cycles 40 years after nordhaus the aim of this article is to survey the huge literature that has emerged in the last four decades following nordhaus s rev econ stud 42 2 169 190 1975 publication on political business cycles pbcs i first propose some developments in history of thought to examine the context in which this ground breaking contribution saw the light of the day i also present a simplified version of nordhaus s model to highlight his key results i detail some early critiques of this model and the fields of investigations to which they gave birth i then focus on the institutional context and examine its influence on pbcs the actual research agenda finally i derive some paths for future research

rockets and feathers the asymmetric speed of adjustment of uk retail gasoline prices to cost changes abstract the paper develops a quadratic quantity adjustment model to test the hypothesis put forward in the recent monopolies and mergers commission report that the speed of adjustment of uk retail gasoline prices to cost changes is more rapid when costs rise than when they fall and that the adjustment path is more concentrated around the mean value on the upswing using data from 1982 to 1989 evidence of faster and more concentrated responses to cost increases were found

empirical studies of gasoline retailing a guide to the literature abstract this paper surveys the empirical literature on gasoline retailing which has been growing rapidly over the last three decades possibly in response to antitrust and regulatory concerns and increased availability of pricing data studies of both pricing and non price decision variables are considered in general it is found that crude oil prices are the primary driver of national price movements over time however market structure has been identified as playing a role in price dynamics equilibrium selection and price differentials across markets and stations the economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers several directions for future work are suggested including the development of theory and demand estimation using high frequency station level data

an essay on the rationality of economic policy the test case of the electional cycle the literature on electional cycles is discussed in the light of the empirical findings by in particular the author two basically different types of explanations of such cycles are compared explanations based on the maximizing behavior of governments aiming at re election explanations building on the insufficiently controlled pressures of events in a democracy it is demonstrated that even when the most well known theory under the nordhaus macraemodel is a rather fragile construction a more robust argument termed the popularity investment argument can be constructed yielding the same basic result from the empirical literature it is concluded that almost the opposite pattern actually occurs in the data it is finally demonstrated that the weak but significant empirical pattern is easy to explain by the elections generate promises which give most real expansion in the second governmental year and most inflation in the third year an average behavior which hardly implies even medium term maximization by governments as assumed under

what causes rockets and feathers an experimental investigation prices usually adjust much faster when costs increase than when costs decrease in spite of the many empirical studies confirming this rockets and feathers phenomenon for different industries the mechanism driving it is not well understood we use simple experimental markets with and without search frictions and either privately or publicly observed cost shocks to study how sensitive the rockets and feathers phenomenon is to changes in search costs and information conditions in contrast to standard theoretical predictions we observe price dispersion and spontaneous asymmetric price adjustments in all treatments neither search costs nor private information on cost shocks are indispensable for prices to adjust asymmetrically in the short term the initial asymmetry quickly disappears if the direction of the cost shocks are publicly known while it persists in both treatments with private information

asymmetric error correction models for the oil gasoline price relationship abstract the existing literature on price asymmetries does not systematically investigate the sensitivity of the empirical results to the choice of a particular econometric specification this paper fills this gap by providing a detailed comparison of the three most popular models designed to describe asymmetric price behavior namely asymmetric ecm autoregressive threshold ecm and ecm with threshold cointegration each model is estimated on a common monthly data set for the gasoline markets of france germany italy spain and uk over the period 1985 2003 all models are able to capture the temporal delay in the reaction of retail prices to changes in spot gasoline and crude oil prices as well as some evidence of asymmetric behavior however the type of market and the number of countries which are characterized by asymmetric oil gasoline price relations vary across models the asymmetric ecm prescribes that long run price asymmetries are most likely to be found in the second stage of the transmission chain conversely the ecm with threshold cointegration suggests that long run price asymmetries vary across countries and markets short run price asymmetries are captured by the asymmetric ecm specification and the tar ecm the latter model suggests that all european countries are likely to be affected by asymmetries at the distribution stage while the results obtained with the asymmetric ecm are mixed

when it rains it pours under what circumstances does job loss lead to divorce much of the previous research that has examined the effect of job loss on the probability of divorce either rely on data from the 1970s 80s data from european countries or focus on aggregate divorce rates this study uses u s micro data from 2000 to 2012 thus including effects of the great recession to examine how displacement i e exogenous job loss affects the probability of divorce the author finds displacement significantly increases the probability of divorce but only if the husband is the spouse that is displaced and his earnings represented approximately half or less of the household s earnings prior to displacement similarly results show that the probability of divorce increases if the wife is employed and as her earnings increase while the mechanism behind these asymmetric results remains unclear these results are consistent with recent research that finds a destabilizing effect on marriages when a wife earns more than her husband

house prices and marital stability we investigate the effect of house price changes on divorce using data for 1991 2010 from the current population survey and the federal housing finance agency our findings suggest that changing house prices significantly affect the share of a cohort that is divorced and that these effects are asymmetric with respect to housing gains versus losses in addition we find differential effects for groups that are more likely to be homeowners versus renters some of this evidence is consistent with homeowners being locked into their homes and hence marriages by increased transactions costs in down markets

the effect of explicit communication on pricing evidence from the collapse of a gasoline cartel we study the collapse of collusion in quebec s retail gasoline market following a competition bureau investigation and show that it involved two empirical regularities high margins and asymmetric price adjustments using weekly station level prices we test whether collusion was successful and whether asymmetric adjustments were part of the cartel s strategy we do so in the markets targeted by the investigation and in markets throughout the province with similar pre collapse pricing cyclical markets our results suggest that stations in both target and cyclical markets adjusted pricing following the announcement margins fell by 30 15 in target cyclical markets and adjustments became more symmetric

price controls and market structure evidence from gasoline retail markets in this paper we study the effect of price floor regulations on the organization and performance of markets the standard interpretation of the effects of these policies is concerned with short run market distortions associated with excess supply since price controls prevent markets from clearing they lead to higher prices while this analysis may be correct in the short run it does not consider the dynamic equilibrium consequences of price controls we demonstrate that price floor regulations can have important long run effects on the the structure of markets by crowding them and creating endogenous barriers to entry for low cost retailers moreover we show that these factors can indirectly lower productivity and possibly even prices we test this in the context of an actual regulation imposed in the retail gasoline market in the canadian province of quebec and show that the policy led to more competition between smaller less efficient stations this resulted in lowered sales and despite the reduction in efficiency did not increase prices

retail price cycles and response asymmetry weekly retail gasoline prices in windsor ontario from 1989 to 1994 appear to respond faster to wholesale price increases than to decreases but exhibit a cyclic pattern inconsistent with a common explanation of response asymmetry i reconcile these observations through a model of price cycles prices on the downward portion of the cycle appear insensitive to costs compared with price increases supporting the theory that price decreases result from battles over market share this pattern resembles a faster response to cost increases than to decreases and the conclusion that asymmetry indicates a role for competition policy may be inappropriate jel classification l13 l71 cycles des prix de detail et reponse asymetrique les prix de detail hebdomadaires de la gazoline a windsor ont entre 1989 et 1994 semblent reagir plus vite aux accroissements qu aux chutes des prix de gros mais suivent un pattern cyclique qui ne semble pas consistant avec l explication traditionnelle en termes de reponse asymetrique l auteur reconcilie ces observations a l aide d un modele de cycle de prix les prix dans la portion descendante du cycle semblent insensibles aux variations de couts par comparaison avec les accroissements de prix ce qui supporte la theorie que les chutes de prix resultent de luttes pour les parts de marche le pattern ressemble a celui declenche par une reponse plus rapide aux augmentations qu aux chutes de couts et la conclusion qui voudrait qu on puisse attribuer le tout a l asymetrie des reponses et que donc une intervention de la politique de la concurrence s impose peut etre inappropriee

domestic violence and divorce law when divorce threats become credible the cost of divorce influences the bargaining position of spouses and thus their behavior within the marriage this study takes advantage of a major and unexpected reduction in divorce costs in spain to estimate the causal effects on domestic violence results suggest a 30 decline in spousal conflict as a consequence of the reform spousal violence is found to have decreased among couples who remained married after the modification in the law which suggests an important role for changes in bargaining within the marriage when divorce becomes a more credible cheaper option

shell shocked the impact of foreign entry on the gasoline retail market in china abstract since joining the wto in 2001 restrictions on foreign entry into china s energy sector have been steadily reduced we investigate the impact of royal dutch shell s entry on the pricing behavior of three varieties of gasoline in the retail market of china using a difference in difference pairwise estimator we show that a year after entry the average absolute price differential of gasoline between two cities increased by around 1 4 before falling the following year in other words shell s entry caused prices to diverge but only for a short period of time the largest price effect was found for highly refined fuels in western cities similar results are found when we examine the effect of entry of the top four foreign retailers policy implications are discussed

symmetric or asymmetric oil prices a meta analysis approach the analysis of price asymmetries in the gasoline market is one of the most widely studied in energy economics however the great variation in the outcomes reported makes the drawing of any definitive conclusions difficult given this situation a meta analysis serves as an excellent tool to discover which characteristics of the various markets analyzed and which specific features of these studies might account for these differences in adopting such an approach this paper shows how the particular segment of the industry analyzed the characteristics of the data the years under review the type of publication and the introduction of control variables might explain this heterogeneity in results the paper concludes on these grounds that increased competition may significantly reduce the possibility of occurrence of asymmetric behavior these results should be taken into consideration therefore in future studies of asymmetries in the oil industry

sequential moves and tacit collusion reaction function cycles in a finite pricing duopoly abstract this paper analyzes a finite horizon sequential move pricing duopoly restricting attention to markov strategies the solution yields stationary patterns independent of initial conditions where the reaction functions follow cycles of three periods the market price never settles down and is at all times strictly above marginal cost long run average industry profits are approximately 5 6 of the monopoly level these results demonstrate that neither a long horizon nor non markovian strategies are required for persistent profits in dynamic price competition games journal of economic literature classification numbers c73 d43 l13

the political process and the use of debt financing by state governments empirical evidence offered in this study suggests that decisions by state government officials to effect debt financed spending depend in part on the state s gubernatorial election cycle more specifically the results reveal relative increases in state debt issues in anticipation of elections and furthermore they reveal that such increases are more significant for states characterized by high interparty political competition while theoretical limitations preclude a definitive explanation for these results the evidence is consistent with a view of state political markets where incumbent parties manipulate public policy so as to enhance the probability of success in pending elections this insight is significant in that it suggests a relationship between public policy decisions and election cycles in a context heretofore unexplored

earnings losses of displaced workers revisited recent literature reviews conclude that job displacement results in sustained earnings losses bruce c fallick 1996 lori g kletzer 1998 and that estimates of the size of those reductions vary with the type of data used in the analysis the industry within which displacement occurs and business cycle conditions the largest estimated losses were obtained using administrative data from pennsylvania during the 1970s and 1980s louis s jacobson robert j lalonde and daniel g sullivan 1993a the data covered a period of high unemployment in a heavily indus trialized state characterized by disproportionate job losses in manufacturing thus the ability to generalize those results to more favorable economic times and states with a greater reliance on service sector employment has been questioned to address these issues administrative data are used to similarly examine the impact of job displacement on earnings losses of workers in connecticut from 1993 to 2004 the work of jacobson lalonde and sullivan jls also provided important methodologi cal advancement by adapting analytical techniques developed for program evaluation james j heckman and v joseph hotz 1989 to the context of job displacement the same techniques fixed effects and time trend estimators as those used in the original jls publication are initially employed here then the methods are extended to include matching estimators developed since their publication both nearest neighbor estimators of average treatment on the treated att and differenced average treatment on the treated datt are adapted to the context of this study heckman hidehiko ichimura and petra todd 1997 heckman et al 1998 and rajeev h dehejia and sadek wahba 1999 2002 the results presented here for connecticut differ in some ways from those found in the work of jls using data from pennsylvania in the period immediately following job loss regardless of the technique employed earnings reductions for workers displaced through mass layoff range from 32 percent to 33 percent jls reported immediate losses of more than 40 percent six years later using the same estimators as jls earnings reductions in connecticut range from 13 percent to 15 percent they report sustained losses in pennsylvania of 25 percent the smaller long term impacts in connecticut demonstrate that under more ordinary economic times esti mated losses from administrative data lie within the range observed using other data sources this finding resolves a long standing conflict among the results of high quality studies that have used differing data sources to study earnings reductions following job loss 1 using two different matching estimators earnings losses six years after mass layoff are 12 percent the matching estimators compare those who experienced mass layoff to compari sons with the same ex ante probability of the event these smaller losses are consistent with the

match quality new information and marital dissolution this article investigates the role of surprises in marital dissolution surprises consists of changes in the predicted earning capacity of either spouse data from the national longitudinal study of the high school class of 1972 is used we find that an unexpected increase in the husband s earning capacity reduces the divorce hazard while an unexpected increase in the wife s earning capacity raises the divorce hazard couples sort into marriage according to characteristics that are likely to enhance the stability of the marriage the divorce hazard is initially increasing with the duration of marriage and the presence of children and high levels of property stabilizes the marriage

high frequency quoting short term volatility in bids and offers at subsecond horizons bids and offers in u s equity markets are more volatile than what would be implied by long term fundamentals to assess costs and consequences this paper suggests that traders random delays latencies interact with quote volatility to generate execution price risk and relative latency costs analysis of the behavior of quote setters suggests that this volatility is more likely to arise from recurrent cycles of undercutting similar to the edgeworth cycles found in product markets rather than mixed strategies of limit order placement

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

the spanish retail petroleum market new patterns of competition since the liberalization of the industry in this paper we study the recent development of the spanish automotive fuels market in the context of a long process of liberalization and competition our aims are twofold first to overview the market s current patterns of competition while taking into account the political structural and strategic aspects that have marked the industry s recent evolution second to study in depth one competitive strategy that nowadays significantly influences competition and final prices the vertical relationships between operators and service stations our analysis draws attention to several indicators that may demonstrate the success of the opening and liberalization process increased levels of competition have stimulated the sector s growth development and modernization and given national firms an excellent platform for competing with newcomers furthermore studying the vertical agreements has produced interesting results we have found that relative price differences among brands increase in line with perceived quality differences and that the vertical separation of refineries and retailers eases price competition in the final market the empirical evidence was backed up with a database of 4164 spanish service stations

competition regulation and pricing behaviour in the spanish retail gasoline market abstract the restructuring of the spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market in june 1990 the spanish government introduced a system of ceiling price regulation in order to ensure that liberalization was accompanied by adequate consumer protection by 1998 prices were left to the free market this paper examines the pricing behaviour of the retail gasoline market using multivariate error correction models over the period january 1993 abolishment of the state monopoly december 2004 the results suggest that gasoline retail prices respond symmetrically to increases as well as to decreases in the spot price of gasoline both over the period of price regulation january 1993 september 1998 and over the period of free market october 1998 december 2004 however once the ceiling price regulation was abolished cooperation emerged between the government and the major operators repsol ypf and cepsa elf to control the inflation rate this resulted in a slower rate of adjustment of gasoline retail prices when gasoline spot prices went up as compared with the european pattern finally the spanish retail margin was by the end of our timing period of analysis as in the starting years after the abolishment of the state monopoly above the european average this pattern confirms our political economic hypothesis which suggests that the spanish government and the oil companies were working together in reducing the inflation in periods of rising oil and gasoline prices it is also inferred that explaining the pricing pattern in energy markets may require different hypothesis than the classical perspective involving just firms taking advantage of market power

estimating retail gasoline price dynamics the effects of sample characteristics and research design the study shows that much of the variation in the findings of the literature on retail gasoline price dynamics is systematic rather than sample variation from using different data estimates of pass through rates depend systematically on research design and features of the data such as the sampling frequency the choice of upstream price whether taxes are included or not the sample length and the postulated lag structure in addition there are systematic differences between time periods and countries using a 20 year long dataset of 28 european union countries we quantify the extent of estimate variation that arises from the choice of data structure from that arising from temporal and country heterogeneity and sampling variation we also show that country heterogeneity itself has systematic components with wealthier countries experiencing slower adjustments our results inform the interpretation of results on pass through rates derived from error correction models they are also of relevance for the broader literature estimating the transmission of price shocks in the economy

gas wars retail gasoline price fluctuations this paper examines the retail gasoline price fluctuations known as gas wars weekly prices for the los angeles area were examined for the period from january 2 1968 through december 23 1975 the observed fluctuations were remarkably regular and apparently large ly predictable the data appear consistent with the recent game theory model of e maskin and j tirole in which competing firms produce edgeworth cycles by undercutting each other and eventually relenting copyright 1993 by mit press

price matching and the domino effect in a retail gasoline market i introduction for many years there have been competition concerns regarding how retail gasoline prices are set in the united states and canada in several u s states including delaware maryland nevada and virginia such concerns gave rise to divorcement legislation under which refiners are not permitted to own or operate gas stations 1 concerns have also been raised in the united states regarding zone pricing a company that owns and operates gasoline stations might define price zones where prices for all its stations in the zone are the same it has been suggested that zone pricing is a form of price discrimination and thus is an indicator of market power it has also been argued that zone pricing can be used in an anticompetitive fashion to coordinate pricing and to deter entry through localized price cutting 2 in canada consumers have complained about the perceived uniformity of retail gas prices in some markets and the perception that retailers raise their prices at the same time consumers have also been troubled by the observation that retail gasoline prices in some markets rise faster than they fall 3 concerns have also been voiced regarding interjurisdictional differences in retail prices that do not appear to be cost based indicating to consumers that retail gasoline markets are not competitive 4 possibly in response to public concerns canada s gasoline industry has advanced a competitive theory of gasoline pricing to explain certain perceived features of gas pricing that lead to allegations of collusion or anticompetitive behavior under this theory it is assumed that gas is a homogeneous good consumers are willing to drive long distances to save small amounts of money on gas and prices are perfectly observable by consumers and nearby competitors based on these assumptions it is argued that intramarket prices tend to uniformity individual stations quickly match price changes by certain competitors and price changes pass through an entire market almost immediately in a domino fashion 5 while many complaints have been made regarding how retail gas prices are set and the gasoline industry has offered explanations there are almost no publicly available studies of how prices actually change in urban retail gasoline markets using complete station specific data on intraday price changes over a long period of time such data are simply not available for most urban markets and can only be collected through personal observation of prices or possibly via subpoena of retailers pricing records in the course of a formal investigation even here price data may not be complete yet without such data there exists no formal evidence that the stylized facts that the competitive theory attempts to explain are indeed facts and that pricing behavior is consistent with a theory of anti or procompetitive conduct the purpose of this article was to use gasoline station price data collected eight times per day for 103 d for 27 gas stations in guelph ontario to evaluate the accuracy of the received wisdom regarding gas prices and the implications advanced by the informal theory of competitive gas pricing while the informal competitive theory seems to have been accepted by governments in many instances some jurisdictions remain unconvinced for example the sense that consumers concerns regarding gasoline pricing were not being addressed led the house of legislative assembly of nova scotia to establish an all party committee to investigate gasoline pricing in that province in its report the committee made a number of strong recommendations such as retail divorcement or price regulation if divorcement is rejected a prohibition of petroleum product sales below acquisition cost and that refiners must charge the same rack price to all customers 6 these recommendations are clearly motivated by anxieties regarding possible anti competitive conduct which may or may not be supported by a detailed analysis of retail gasoline pricing data

assortative mating and female labor supply this paper investigates married women s hours worked disaggregated by the husband s wage decile in the united states this pattern has changed from downward sloping to hump shaped we show that this development can be explained within a standard household model of labor supply when taking into account trends in assortative mating a quantitative analysis of our model shows that female wage growth and decreasing fertility are primarily responsible for the overall increase in wives hours since the 1970s the fact that the most pronounced increases are observed for wives married to high wage men is a result of trends in assortative mating

lucky in life unlucky in love the effect of random income shocks on marriage and divorce abstract economists have long been interested in the extent to which economic resources affect decisions to marry and divorce however this issue has been difficult to address empirically due to a lack of exogenous income shocks we overcome this problem by exploiting the randomness of the florida lottery and comparing recipients of large prizes to those of small prizes results indicate that while positive income shocks of 25 000 to 50 000 do not cause statistically significant or economically meaningful changes in divorce rates single women are less likely to marry as a result of the additional income

asymmetric price adjustments in us gasoline markets impacts of spatial dependence on the rockets and feathers hypothesis gasoline retail prices show sometimes wild asymmetric fluctuations over time we explore the impact of spatial dependence on gasoline retail price formation by using for the first time an asymmetr

retail gasoline pricing what do we know abstract we use a data set consisting of a three year panel of prices from a sample of gasoline stations located in suburban washington dc and a corresponding census of the region s stations to develop three new empirical findings about retail gasoline pricing first while average retail margins vary substantially over time by more than 50 over the three years we analyze the shape of the margin distribution remains relatively constant second there is substantial heterogeneity in pricing behavior stations charging very low or very high prices are more likely to maintain their pricing position than stations charging prices near the mean third retail gasoline pricing is dynamic despite the heterogeneity in station pricing behavior stations frequently change their relative pricing position in this distribution sometimes dramatically we then relate these three findings to relevant theories of retail pricing while many models of retail pricing are consistent with some of our findings we find that all have serious shortcomings

the economic consequences of absent parents we examine the effects of family structure on economic resources controlling for unobservable family characteristics in the year following a divorce family income falls by 41 percent and family food consumption falls by 18 percent six or more years later the family income of the average child whose parent remains unmarried is 45 percent lower than it would have been if the divorce had not occurred marriage raises the long run family income of children born to single parents by 45 percent these estimates are substantially smaller than the losses that are implied by cross sectional comparisons across family types

marriage and divorce changes and their driving forces the family is not a static institution in recent decades marriage rates have fallen divorce rates have risen and the defining characteristics of marriage have changed the economic approach to the family seeks to explain these trends by reference to models that can also explain how and why families form gary becker s 1981 treatise on the family proposed a theory based on production complementarities in which husband and wife specialize in the market and domestic spheres respectively production complementarities also arise in the production and rearing of one s own children however production complementarities at least as initially described are decreasingly central to modern family life increased longevity and declining fertility mean that most of one s adult life is spent without one s own children in the household also the rise in marital formation at older ages including remarriage means that many families form with no intention of producing children moreover increases in female labor force participation suggest that household specialization has either declined or at least taken on a different meaning these changes have come about as what is produced in the home has been dramatically altered both by the emergence of labor saving technology in the home and by the development of service industries that allow much of what was once provided by specialized homemakers to be purchased in the market the availabil

time use during the great recession using data from the american time use survey between 2003 and 2010 we document that home production absorbs roughly 30 percent of foregone market work hours at business cycle frequencies leisure absorbs roughly 50 percent of foregone market work hours with sleeping and television watching accounting for most of this increase we document significant increases in time spent on shopping child care education and health job search absorbs between 2 and 6 percent of foregone market work hours we discuss the implications of our results for business cycle models with home production and non separable preferences jel codes d13 e32 j22

higher prices at canadian gas pumps international crude oil prices or local market concentration an empirical investigation there is little consensus on whether higher retail gasoline prices in canada are the result of international crude oil price fluctuations or local market power exercised by large vertically integrated firms i find that although both increasing local market concentration and higher average monthly wholesale prices are positively and significantly associated with higher retail prices wholesale prices are more important than local market concentration similarly crude oil prices are more important than the number of local wholesalers in determining wholesale prices these results suggest that movements in gasoline prices are largely the result of input price fluctuations rather than local market structure

electoral and welfare consequences of political manipulation of the economy abstract this paper examines the long term electoral and welfare consequences of repeated strategies whereby a political office holder induces cycles in economic variables to maximize his chances of re election unlike other studies of political business cycles we focus on questions of the desirability of these cyclical patterns and on the long run properties of these political economic models noting that the welfare costs of vote maximizing in a single term extend beyond that term we examine in detail the properties of the long run equilibrium path to which such cycles converge if the economy starts above this path vote maximizing can lead to increased social welfare and vote margins however if the economy starts below this path vote maximizing in the present can cause reduced votes and electocal defeat in subsequent terms this possibility should lead a far sighted enlightened politician or political party to eschew vote maximizing tactics and the political business cycles which accompany them and thus canhelp explain why empirical studies have not found convincing evidence of the existence of such cycles this paper also quantifies the dependence of this long run equilibrium path on the important political and economic parameters of the model

price adjustments by a gasoline retail chain we use daily data to examine price responses in the swedish gasoline market to changes in the rotterdam spot price exchange rates and taxes the distribution of price adjustments by a leading retail chain for the period january 1980 to december 1996 is symmetric with no small adjustments an error correction model shows that in the short run prices gradually move towards the long run equilibrium in response to cost shocks there is some evidence that also in the short run prices are stickier downwards than upwards prices respond more rapidly to exchange rate movements than to the spot market price our analysis emphasizes that to fully understand price adjustments it is necessary to examine data sets where the sample frequency at least matches that of price adjustments

the pricing behavior of italian gas stations some evidence from the cuneo retail fuel market abstract this paper studies how gas stations adjust their gasoline and diesel prices in response to their neighboring competitors the empirical analysis relies on data collected from january to august 2011 on the daily prices of 20 gas stations located in cuneo italy these data show significant price uniformity especially within the same geographical area of the town approximately one third of gas stations responded within a day to targeted competitors price changes indicating some evidence of price matching behavior in the industry additionally there is some but discontinuous geographical price propagation testifying to the presence of a weak domino effect finally spatial econometric analysis suggests that there is spatial dependence between gas stations up to about 1 1 km

forecasting gasoline prices in the presence of edgeworth price cycles abstract forecasting is a central theme in economics the ability to forecast prices enables economic agents to make optimal decisions for the present and future in this article we investigate if and how gasoline prices can be forecast in retail gasoline markets that are subject to high frequency asymmetric price cycles known as edgeworth price cycles we examine a series of purchase timing decision rules and a series of feasible forecasting algorithms for updating those rules over time we find that in the presence of cycles agents in our five australian markets can systematically reduce purchase prices below market average the equivalent of 11 to 15 u s cents per gallon using simple decision rules and feasible forecasting algorithms

tirole s industrial regulation and organization legacy in economics jean tirole was awarded the 2014 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of market power and regulation this paper provides an overview of some of that work and of his related contributions to game theory

is there an asymmetry in the response of diesel and petrol prices to crude oil price changes evidence from new zealand this paper examines how pre tax petrol and diesel prices in new zealand respond to changes in crude oil prices using an asymmetric error correction model our results show that oil companies adjust diesel prices upwards faster than they adjust them downwards and the difference is statistically significant however we find no statistical evidence for an asymmetry in the adjustment of petrol prices even though the magnitude of estimated coefficients suggests a faster response to rising prices as diesel pricing is not as competitive as petrol pricing calls for further government actions and monitoring of the oil market may be justified our findings also have important implications for the conduct of monetary policy as the pass through of crude oil price changes can affect cost push inflation

the electoral budget cycle this article begins with a review of the now substantial literature on the thesis that polticians manipulate governmental outputs so as to favor their chances of reelection it concludes that while this electoral cycle thesis was initially overstated by its proponents it retains more plausibility than recent critics have allowed this conclusion is then demonstrated through an analysis of expenditures by the ten provincial governments in canada between 1951 and 1984

do edgeworth price cycles lead to higher or lower prices abstract a recent literature seeks to understand the causes of the high frequency asymmetric retail price cycles observed in many retail gasoline markets however much less attention has been given to the effects of the cycles in particular whether the cycles lead to higher or lower prices and margins the leading theory for the underlying cause of the price cycles edgeworth price cycles is silent on the issue the challenge in addressing this most important question has been the difficulty in isolating cycle effects from other confounding factors especially market structure in this article i exploit a unique natural experiment to isolate the effect of cycles a refinery fire that in a matter of days halted cycles that had previously persisted for decades i find that edgeworth price cycles lead to lower prices and lower margins i conclude with implications for competition policy

waiting for mr right rising inequality and declining marriage rates abstract this paper demonstrates that women search longer for their first or second husband in cities with higher male wage inequality and examines several alternative explanations a causal link is established by controlling for city fixed effects and city specific time trends and by using inequality in the woman s state of birth as a proxy for local male inequality increasing inequality explains about 25 of the marriage rate decline over the last few decades and this is not due to the endogenous moving or labor force decisions of women nor to the marital decisions of men in reaction to changes in their own wages

business cycles and divorce evidence from microdata we use individual level data to show that divorce is pro cyclical on average a finding robust to the inclusion of a wide range of controls pro cyclical divorce is concentrated among women who married young and or do not have a college degree

econometric models of asymmetric price transmission abstract in this paper we review the existing empirical literature on price asymmetries in commodities providing a way to classify and compare different studies that are highly heterogeneous in terms of econometric models type of asymmetries and empirical findings relative to the previous literature this paper is novel in several respects first it presents a detailed and updated survey of the existing empirical contributions on price asymmetries in the transmission mechanism linking input prices to output prices second this paper presents an extension of the traditional distinction between long run and short run asymmetries to new categories of asymmetries such as contemporaneous impact distributed lag effect cumulated impact reaction time equilibrium and momentum equilibrium adjustment path regime effect regime equilibrium adjustment path each empirical study is then critically discussed in the light of this new classification of asymmetries third this paper evaluates the relative merits of the most popular econometric models for price asymmetries namely autoregressive distributed lags partial adjustments error correction models regime switching and vector autoregressive models finally we use the meta regression analysis to investigate whether the results of asymmetry tests are not model invariant and find which additional factors systematically influence the rejection of the null hypothesis of symmetric price adjustment the main results of our survey can be summarized as follows i each econometric model is specialized to capture a subset of asymmetries ii each asymmetry is better investigated by a subset of econometric models iii the general significance of the f test for asymmetric price transmission depends mainly on characteristics of the data dynamic specification of the econometric model and market characteristics overall our empirical findings confirm that asymmetry in all its forms is very likely to occur in a wide range of markets and econometric models

retail gasoline price cycles across spatially dispersed gasoline stations abstract studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations this paper uses daily observations on station specific prices within a large canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility this paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior

do retail gasoline prices respond asymmetrically to cost shocks the influence of edgeworth cycles asymmetric price cycles similar to edgeworth cycles are appearing in increasingly many retail gasoline markets in the united states and worldwide the asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks asymmetric passthrough this article estimates asymmetric passthrough for the market of toronto which exhibits cycles and decomposes it into two components that part explainable by the cycles and that part driven by other unknown sources significant asymmetric passthrough is found with increases passed through more quickly than decreases a significant cause of the finding is the presence of the cycles themselves

divorce and the cognitive achievement of children children of divorced parents exhibit lower test scores and educational attainment have these correlations a causal interpretation parents who divorce may be less likely to invest in their children while together or they may divorce to shield their children from the effects of marital conflict i study the relationship between children s achievement and the marital status of their parents within a dynamic framework in which partners decide on whether to remain married how to interact with or without conflict and child investments i then assess whether a child whose parents divorced would have been better off had divorce not occurred

vertical control and price cycles in gasoline retailing we examine norwegian gasoline pump prices using daily station specific observations from 2003 to 2006 the four big gasoline companies use a vertical restraint that is adopted industry wide labeled price support this moves price control from the hands of independent retailers into the hands of the headquarters retail gasoline prices follow a fixed weekly pattern where we observe de facto simultaneous decision making by the headquarters without knowledge of their rivals prices when every monday around noon they decide to increase pump prices to the same level the price level on mondays corresponds to the recommended prices published by the headquarters of the gasoline companies

the taxation effect on gasoline price asymmetry nexus evidence from both sides of the atlantic this paper explores the degree of competition in various gasoline markets and infers possible causes of price asymmetry across the globe for this purpose we use the dynamic ordinary least square method in order to estimate price asymmetry in twelve european countries and the united states for a sample of weekly observations which spans the period from june 1996 to august 2011 the results indicate the common perception that less competitive gasoline markets exhibit price asymmetry while highly competitive gasoline markets follow a symmetric price adjustment path finally the inclusion of taxes vat and excise tax into retail gasoline prices supports the existence of price asymmetry in many european countries

can exchange rate pass through explain the asymmetric gasoline puzzle evidence from a pooled panel threshold analysis of the eu abstract this study contributes to the literature since it tries to link the exchange rate pass through erpt with the rockets and feathers hypothesis using a panel of eu 28 countries allowing for the existence of an endogenous threshold variable our empirical findings indicate that the threshold model is better suited to this analysis than the baseline linear adjustment model this is the case since the latter restricts the threshold to be centered around zero and the dynamic response to cumulative shocks cannot be properly identified the empirical findings reveal that the threshold variable expressed by the trade weighted dollar exchange rate index is statistically significant only in the sample above the threshold high regime this means that for the net eu exporting countries fluctuations in the real effective exchange rate of the us against its major eu trading partners do affect the level of pre tax retail gasoline prices with the relevant elasticity exceeding unity complete erpt moreover all the statistical tests reject the null hypothesis that there is no significant threshold and thus an asymmetric adjustment gasoline mechanism prevails the impulse response functions confirm our empirical findings that erpt can explain asymmetric gasoline pricing within the eu periphery

price response asymmetric information and competition we compare predictions from a theoretical model based on the structure of the main outdoor retail market in jerusalem with the results of an empirical analysis of price response to changes in cost we find that firms without adjacent competition exhibit both upward and downward price rigidity an outcome we ascribe to asymmetric information between the consumer and the firm given that previous studies have focused on downward price rigidities of firms with market power our findings highlight the importance of accounting for transitory information asymmetries between the consumer and the firm when studying price rigidity

the congress and fiscal policy although the common belief is that the congress has paid little attention to fiscal policy the same kinds of political economic models which have been used to explain presidential budgetary policy may be used equally well to explain congressional budgetary behavior the congress fiscal policy appears to be systematically sensitive to both economic and political factors changes in the unemployment rate have a major impact on congressional budgetary policy as for political factors the president s lead is followed most closely on revenue proposals and not at all on the expenditure side the electoral cycle in particular the off year congressional election year is also important inducing larger deficits and smaller increases in revenues

gender identity and relative income within households band s income we argue that this pattern is best explained by gender identity norms which induce an aversion to a situation where the wife earns more than her husband we present evidence that this aversion also impacts marriage formation the wife s labor force participation the wife s income conditional on working marriage satisfaction likelihood of divorce and the division of home production within marriage markets when a randomly chosen woman becomes more likely to earn more than a randomly chosen man marriage rates decline in couples where the wife s potential income is likely to exceed the husband s the wife is less likely to be in the labor force and earns less than her potential if she does work in couples where the wife earns more than the husband the wife spends more time on household chores moreover those couples are less satisfied with their marriage and are more likely to divorce these patterns hold both cross sectionally and within couples over time

job displacement disability and divorce earnings shocks should affect divorce probability by changing a couple s expected gains from marriage we find that the divorce hazard rises after a spouse s job displacement but does not change after a spousal disability this difference casts doubt on a purely pecuniary motivation for divorce following earnings shocks since both types of shocks exhibit similar long run economic consequences furthermore the increase in divorce is found only for layoffs and not for plant closings suggesting that information conveyed about a partner s noneconomic suitability as a mate due to a job loss may be more important than financial losses in precipitating divorce

an empirical investigation of the determinants of asymmetric pricing abstract this article empirically investigates the cause of asymmetric pricing retail prices responding faster to cost increases than decreases using daily price data for over 11 000 retail gasoline stations i find that prices fall more slowly than they rise as a consequence of firms extracting informational rents from consumers with positive search costs premium gasoline prices are shown to fall more slowly than regular fuel prices which supports theories based upon competition with consumer search further testing also rejects focal price collusion as an important determinant of asymmetric pricing

labor supply and marital separation panel data are used to estimate the effect of marital separation on labor supply female labor supply increases substantially and male labor supply declines marginally lending support to the theory of specialization within the household the most interesting finding is that women began to increase their labor supply well before the actualsplit occurs suggesting either that shocks to labor supply change divorce probabilities or that women with a higher likelihood of divorcework more this argument is pursued by constructing and estimating a simultaneous model of labor supply and divorce risk copyright 1986 by american economic association

rockets and feathers meet joseph reinvestigating the oil gasoline asymmetry on the international markets abstract we reinvestigate the rockets and feathers effect between retail gasoline and crude oil prices in a new framework of fractional integration long term memory and borderline non stationarity the most frequently used error correction model is examined in detail and we find that the prices return to their equilibrium value much more slowly than would be typical for the error correction model such dynamics is usually referred to as the joseph effect the standard procedure is shown to be troublesome and we introduce two new tests to investigate possible asymmetry in the price adjustment to equilibrium under these complicated time series characteristics on the dataset of seven national gasoline prices we find no statistically significant asymmetry the proposed methodology is not limited to the gasoline and crude oil case but it can be utilized for any asymmetric adjustment analysis

retail price asymmetries in local gasoline markets the experience of the salt lake city retail gasoline market during the 1989 to 1993 period suggests that there was asymmetric adjustment wholesale and retail price data unique to the salt lake market are used to test for the existence of three types of price asymmetry during this period with respect to the magnitude of the pass through of wholesale price changes evidence of price asymmetry during periods of average weekly wholesale price changes is found however during market shocks the evidence points in the direction of retail price symmetry evidence of asymmetry with respect to the timing and pattern of the retail price response is found for periods of both average and market shock changes since gasoline is purchased by the consumer in local markets conclusions reached by studies of market pricing behaviour that rely on national data may not be relevant for local policy decisions this appears to be the case for the salt lake city market

matching finding a partner for life or otherwise how do job worker and husband wife relationships form and why do some matched pairs subsequently separate economists and game theorists are in the process of developing and applying an equilibrium explanation of match formation and separation based on the principle of voluntary pairing under competitive conditions the purpose of this paper is to assess the current state of these developments the general existence of patnership structures with the property that no one has an incentive to separate has been established these equilibrium structures maximize aggregate value over the set of all feasible match structures in the transferable utility case according to this pure theory of matching competition for partners can be expected to yield equilibrium match structures that are both stable and socially efficient at least under conditions of frictionless certainty search theoretic models that take account of meeting costs and initial uncertainty about match values have been developed to explain sepa

the economic significance of gasoline wholesale price volatility to retailers abstract we show that gasoline retailer profits heavily depend on the direction of wholesale cost movements using a unique firm level proprietary sample of 121 u s gasoline retailers collectively operating over 4500 stores we find that it tends to be only in months when wholesale prices are declining that retailers make meaningfully positive profits and that in spite of the low profits earned when wholesale prices are increasing over the entire wholesale price cycle volatility is preferred by retailers to relatively stable wholesale prices we are the first to our knowledge to link asymmetric price responses directly to firm profits and characterize the economic significance of asymmetric pricing in the retail gasoline industry our findings may have important implications for the scores of other industries where asymmetric retail to wholesale price responses are found

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

money and politics in a small open economy a time series analysis indicates monetary growth and the gallup poll in canada are systematically related at electoral cycle periodicities 5 to 20 quarters under flexible exchange rates and demonstrates the absence of an electoral component in canadian monetary growth under fixed rates these results confirm empirically a widely accepted extension of the mundell fleming argument that monetary policy is effective only under flexible rates which to my knowledge has not before been directly investigated international constraints on the small open economy under fixed rates lead to the abandonment of monetary policy as an active instrument in electoral politics

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers