Understanding Price Leadership in Fiji’s Energy Market

Abstract

In this note, we explore price leadership in Fiji’s energy market. Using key energy prices, such as oil, diesel, premix, kerosene and motor spirits, we propose a price leader model. The price discovery model and its theory were proposed by Westerlund, Reese, and Narayan (2017). Using an application of this model to Fiji’s energy price data, we unravel evidence that premix is the market leader with a 54.8% market share followed by the oil price (33.9%). From these results, we draw implications for price regulations and identify the future direction for energy policy.