Heterogeneous Cost Pass-through in the Retail Fuel Market
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This paper empirically examines firm-level heterogeneity in cost pass-through by taking advantage of the plunges in global oil prices during the second half of 2014 and during the first four months of 2020. This study found that during both periods cost pass-through varies across gas stations depending on their characteristics. Namely, retail fuel prices are more cost-reflective at self-service or thrifty stations and stations under higher competition. Conversely, cost pass-through is lower at a premium station than at a non-premium station. These findings remain robust after addressing non-linearity or delay in pass-through and suggest that low-income consumers may benefit more from falling oil prices than higher-income consumers.
Abstract
This paper empirically examines firm-level heterogeneity in cost pass-through by taking advantage of the plunges in global oil prices during the second half of 2014 and during the first four months of 2020. This study found that during both periods cost pass-through varies across gas stations depending on their characteristics. Namely, retail fuel prices are more cost-reflective at self-service or thrifty stations and stations under higher competition. Conversely, cost pass-through is lower at a premium station than at a non-premium station. These findings remain robust after addressing non-linearity or delay in pass-through and suggest that low-income consumers may benefit more from falling oil prices than higher-income consumers.
참고문헌 (35)
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