Previous research has analyzed the behavior of retail gasoline stations in how they adjust their prices. In this paper we analyze the daily movements in prices of four retail gasoline stations located in Newburgh, New York. We find some evidence to support the notion that the behavior is explained by menu costs. There is substantial evidence that the firms adjust their prices asymmetrically, being more inclined to increase than to decrease prices. We conclude that the pricing behavior is being determined by a combination of search costs for the consumers and menu costs for the producers. Copyright © 2007 John Wiley & Sons, Ltd.
Davis, M. C. (2007). The Dynamics of Daily Retail Gasoline Prices. Managerial and Decision Economics.
The definitive version is available at http://dx.doi.org/10.1002/mde.1372
2005 IEEE Instrumentationand Measurement Technology Conference Proceedings
Keywords and Phrases
Gasoline Prices; Menu Costs; Search Cost
Article - Journal
© 2007 John Wiley & Sons, Ltd., All rights reserved.