Asymmetric price adjustments under ever-increasing costs: evidence from the retail gasoline market in Colombia
There is abundant empirical evidence showing that asymmetric price adjustments exist in a wide variety of markets. Prices tend to grow faster when costs rise relative to the rate at which prices drop when costs fall. The objective of this paper is to empirically test whether asymmetric price adjustm...
- Autores:
-
Hofstetter Gascón, Marc - 1973
Tovar Mora, Jorge Andrés
- Tipo de recurso:
- Work document
- Fecha de publicación:
- 2008
- Institución:
- Universidad de los Andes
- Repositorio:
- Séneca: repositorio Uniandes
- Idioma:
- eng
- OAI Identifier:
- oai:repositorio.uniandes.edu.co:1992/8079
- Acceso en línea:
- http://hdl.handle.net/1992/8079
- Palabra clave:
- Asymmetric price adjustments
Gasoline retail markets
Search
Reference prices
Precios regulados - Colombia
Gasolina - Precios
Comercio del combustible - Colombia
Colombia - Política económica
D43, D82, D83
- Rights
- openAccess
- License
- http://creativecommons.org/licenses/by-nc-nd/4.0/
| Summary: | There is abundant empirical evidence showing that asymmetric price adjustments exist in a wide variety of markets. Prices tend to grow faster when costs rise relative to the rate at which prices drop when costs fall. The objective of this paper is to empirically test whether asymmetric price adjustments exist in a scenario where costs are increasing every period. The Colombian retail gasoline market offers an excellent case study due to a specific regulation, something discussed further in this paper. Our results suggest that when costs rise above the reference price -a government suggested retail price- retail prices tend to rise less relative to when costs grow below the reference price. Thus, asymmetry does exist. |
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