| 来源类型 | Research papers
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| 规范类型 | 报告
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| A DSGE model for endogenous price variation in domestic petroleum products |
| B. S. Choi
|
| 发表日期 | 2013-12-31
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| 出版年 | 2013
|
| 语种 | 英语
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| 摘要 | ABSTRACT
Output prices do not react symmetrically to change in input prices. This pattern is well-known as asymmetric pricing and appears in retail gasoline stations. In spite of the abundance of empirical works confirming this stylized fact, there has not been much progress in terms of theoretical explanation for finding main driving forces for it.
The purpose of this study is to explore the theoretical explanation of consumer search in order to explain the gasoline and diesel price dynamics appeared in Seoul. First we test the empirical relationship between temporal (daily) price competition and the rival��s distance from the store. Our empirical result indicates that price competition is severe as the rival is far from the store. Consumers�� search activities induce price competition among stores.
In theory, given consumers�� search intensity, firms optimize their profit by choosing prices under high than low production cost. I build a model of dynamic stochastic equilibrium by incorporating a law of motion for brand loyalty with the original static model, developed by Chandra and Tapata(2011). The model can generate two kinds of the asymmetric dynamics of price dispersion attributed to consumers' choice between (1)��searching a new store or (2) visit the previous store. The model exhibits a significantly left-skewed distribution of price dispersion when consumers quickly respond (temporary) input price shocks while it exhibits a significantly right-skewed distribution of price dispersion when consumers are insensitive to temporary shocks and are not easily change their visiting stores.
We find that Gangnam-gu and Songpa-gu display the first pattern while Dongdaemun-gu and Seocho-gu display the second pattern. In addition, we posit that low-income consumers may increase search activity when input price rises. Indeed, in low income areas, the theoretical prediction is opposite. |
| URL | http://www.keei.re.kr/web_keei/en_publish.nsf/by_report_year/69FC06E7571BC8B049257C75002E5417?OpenDocument
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| 来源智库 | Korea Energy Economics Institute (Republic of Korea)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/322769
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推荐引用方式
GB/T 7714 |
B. S. Choi. A DSGE model for endogenous price variation in domestic petroleum products. 2013.
|
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