Price Asymmetries and Volatility in the Italian Gasoline Market

Abstract

The oil price volatility registered in this period has suggested us to investigate the ef that variability has on price transmission mechanism on the Italian gasoline market. In this paper, we investigate the effect that price volatilities have on price speed adjustment in the production–distribution chain. We consider the wholesale and the retail market. We divide the sample into two subsamples and estimate, in the former, industrial gasoline price responses for a period of low volatility and a period with high volatility of oil prices and, in the latter, retail gasoline price responses for the same period of low and high volatilities of industrial prices. In the period marked by a large price volatility, the degree of asymmetry tends to decrease. In fact, the effects of downstream price decrease are larger than those of price increase and do not reflect the consumers' perception.