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Testing for Asymmetric Pricing Behaviour in Irish and UK Petrol and Diesel Markets

Colin Bermingham and Derry O'Brien

Year: 2011
Volume: Volume 32
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No3-1
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Abstract:
This paper empirically tests whether Irish and UK petrol and diesel markets are characterised by asymmetric pricing behaviour. The econometric assessment uses threshold autoregressive models and a dataset of monthly refined oil and retail prices covering the period 1994 to mid-2009. In addition to providing an appraisal of the existence of asymmetry in the Irish and UK markets, the paper provides an important methodological contribution. Tests of asymmetry in the literature normally partition the sample into periods of falling and rising international oil prices. This fails to account for price pressures coming from the equilibrium error of the cointegrating relationship. In particular, the possibility of conflicting price pressures arising from short-run dynamics in retail prices and responses to disequilibrium errors needs to be explicitly modelled. We take this issue into account in an econometric model and we highlight the importance of this distinction. In terms of the asymmetric behaviour of these markets, the paper finds no evidence to support the "rockets and feathers" hypothesis that prices rise faster than they fall in response to changes in the value of international oil prices.



"Show Me the Energy Costs": Short and Long-term Energy Cost Disclosure Effects on Willingness-to-pay for Residential Energy Efficiency

James Carroll, Claudia Aravena, Marco Boeri, and Eleanor Denny

Year: 2022
Volume: Volume 43
Number: Number 2
DOI: 10.5547/01956574.43.2.jcar
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Abstract:
Imperfect information on future energy costs can lower the demand for more energy efficient technologies, with clear implications for energy supply, emissions and climate change. These hypotheses are explored using a randomised discrete choice experiment for property rental decisions. Results show that when energy consumption is expressed in physical units (as per the current EU labels) the willingness-to-pay for energy efficiency improvements is small and marginally significant. While bimonthly energy cost information displayed in monetary terms has no effect on the valuation of energy efficiency, annual monetary energy cost information led to a significant increase. This is the first paper to compare short and long-term point of sale energy cost information for household property decisions. There are clear implications for labelling policy for properties—framing energy consumption according to long-term monetary cost increases the demand for energy efficiency.





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