Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market

Published as "Asymmetric Price Adjustments in a Deregulated Gasoline Market", Philippine Review of Economics, Vol. XXXIX, No. 1, June 2002

44 Pages Posted: 21 Apr 2007

See all articles by John Michael Ian S Salas

John Michael Ian S Salas

Harvard University - Center for Population and Development Studies

Date Written: April 2002

Abstract

This paper employs ordered probit, partial adjustment, and vector error correction models to characterize price adjustments in the Philippine retail gasoline market since its deregulation. It finds that pricing decisions of oil firms depend significantly on eight weeks of previous changes in crude cost. It shows that the speed of adjustment of retail prices to its long-run equilibrium relation with crude cost has been following an accelerating trend but is vulnerable to intervening factors. Lastly, it provides empirical evidence that pump prices respond quicker and more fully to increases in crude cost rather than to decreases.

Keywords: gasoline, crude, oil, price asymmetry, price adjustment, Philippines, retail, deregulation, pump prices

JEL Classification: L11, L13, L81

Suggested Citation

Salas, John Michael Ian S, Price Adjustments and Asymmetry in the Philippine Retail Gasoline Market (April 2002). Published as "Asymmetric Price Adjustments in a Deregulated Gasoline Market", Philippine Review of Economics, Vol. XXXIX, No. 1, June 2002, Available at SSRN: https://ssrn.com/abstract=981663 or http://dx.doi.org/10.2139/ssrn.981663

John Michael Ian S Salas (Contact Author)

Harvard University - Center for Population and Development Studies ( email )

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Cambridge, MA 02138
United States