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Retail Gasoline Price Cycles: Evidence from Guelph, Ontario Using Bi-Hourly, Station-Specific Retail Price Data

This paper uses prices that were directly observed at 27 gasoline stations in Guelph, Ontario, eight times per day for 103 days in late-2005, to examine several basic predictions of a theory of price cycles. It is found that price movements in Guelph are more consistent with the Edgeworth cycle theory than with other dynamic pricing theories. The data also identify some interesting (and somewhat systematic) pricing patterns that have not been identified in previous studies, and which would likely be overlooked with less complete data. These findings are not only of interest to applied economists and policymakers, but also to theoreticians who are interested in refining the theory to make more accurate predictions.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy Modeling – Energy Data, Modeling, and Policy Analysis

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination

Keywords: Gasoline prices, high frequency price data, Guelph (Ontario), Edgeworth cycle theory

DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No1-4

Published in Volume 30, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.