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

Benjamin Atkinson

Year: 2009
Volume: Volume 30
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No1-4
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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.

Daily Price Cycles and Constant Margins: Recent Events in Canadian Gasoline Retailing

Benjamin Atkinson, Andrew Eckert, and Douglas S. West

Year: 2014
Volume: Volume 35
Number: Number 3
DOI: 10.5547/01956574.35.3.3
View Abstract

Retail gasoline pricing in Canada has typically followed certain distinct patterns, ranging from long durations of price rigidity relative to wholesale prices to daily price cycles. This paper examines recent changes to pricing patterns in Canadian cities resulting in new equilibrium behavior, and discusses possible reasons for these changes. Using high frequency retail price data obtained from GasBuddy.com, it is demonstrated that volatility changes exhibited in Toronto appear to correspond to an increased frequency of the price cycle, and replacement of the cycle with fixed retail margins. While multiple factors may have contributed to the first pricing change, the second change corresponds closely to a refinery fire in southern Ontario; this temporary event (in conjunction with a rail strike and refinery maintenance) could have triggered a permanent change in equilibrium behavior. This paper also illustrates problems for academic researchers and policymakers when using low frequency price data to analyze pricing in a market characterized by a price cycle. Keywords: Price cycle, Gasoline retailing, Constant margins, Supply shocks

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