دانلود مقاله ISI انگلیسی شماره 3040
عنوان فارسی مقاله

ساختار بازار و تعدیل قیمت در بازار عمده فروشی بنزین ایالات متحده

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
3040 2008 25 صفحه PDF سفارش دهید محاسبه نشده
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عنوان انگلیسی
Market structure and price adjustment in the U.S. wholesale gasoline markets
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Energy Economics, Volume 30, Issue 3, May 2008, Pages 937–961

کلمات کلیدی
تعدیل قیمت بنزین - عدم تقارن - ساختار بازار - مدل تصحیح خطا
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پیش نمایش مقاله ساختار بازار و تعدیل قیمت در بازار عمده فروشی بنزین ایالات متحده

چکیده انگلیسی

The issue of sticky prices in U.S. wholesale gasoline market is re-examined allowing for the effect of market structure due to increased market concentration caused by mergers, acquisitions and joint ventures which started in the late 1990s in the U.S. oil industry. I investigate the effects of market structure on the pattern of price adjustment based on the notion that increased market concentration leads to downward price stickiness and asymmetric short run price adjustment in the transmission of crude price changes to wholesale gasoline price. I find that market concentration has an insignificant asymmetric effect on the speed of price adjustment but a significant asymmetric effect on short run price adjustments in the response of wholesale gasoline prices to crude price shocks in three U.S. wholesale markets. Furthermore, the signs on the coefficients of market concentration effects on price dynamics in the models support the assertion that increased market concentration leads to downward price stickiness in only one of the three markets examined. Overall, the results indicate that market structure does not have a strong effect on the dynamics of price adjustment.

مقدمه انگلیسی

This paper examines how the pattern of price adjustment in U.S. wholesale gasoline market is affected by changes in market concentration in the late 1990s.1 This period was characterized by series of major mergers, acquisitions and joint ventures (hereafter, mergers) that led to the consolidation of the downstream operations of some of the big oil companies in the U.S. This is the first study to investigate the effects of the recent changes in the U.S refining industry on the dynamics of wholesale gasoline price adjustment. I examine the effects of market structure, measured by market concentration, on price adjustment based on the notion that increased market concentration leads to downward price stickiness and asymmetric short run adjustment by asking the questions: “How does market concentration affect the speed of price adjustment?” and “How does market concentration affect short run price adjustment?” The speed of price adjustment deals with the comparison of how quickly gasoline prices adjust back to long run equilibrium when crude oil price changes, while short run adjustment deals with the magnitude of immediate gasoline price changes to crude oil price changes. This study isolates the response pattern of wholesale gasoline price changes to crude oil price changes as a result of market structure, measured directly by market concentration and indirectly by the potential use of refining capacity utilization by firms. I use an asymmetric error correction model that incorporates the Herfindahl–Hirschman Index (HHI) and refinery capacity utilization, to measure the effect of market structure on price adjustment.2 Gasoline price changes may reflect changes in various factors including crude oil price changes, changes in the degree of market concentration (level of competition in the market), firms' inventory management, refinery adjustment costs and costs of adjusting supply, refinery capacity utilization and a host of other factors that are not easily observable. These factors notwithstanding, the sharp increases and possible asymmetric adjustment in wholesale gasoline prices have mostly been attributed to refiners wielding their market power. The Connecticut attorney general, was quoted in the December 7, 1998 Washington Post as saying the Exxon–Mobil merger will face scrutiny from regulators because “gas prices go up a lot faster than they go down.”3 The Chairman of the Permanent Subcommittee on Investigations, Senator Carl Levin, in June 2001, directed the Majority Staff of the Subcommittee to investigate the reasons for price increases, and, in particular, whether the increased concentration within the refining industry has contributed to price spikes and price increases in the Midwest gasoline market.4 In 2003, Senator Carl Levin, the Ranking Minority Member, Permanent Subcommittee on Investigations, Senate Committee on Governmental Affairs, asked the United States Government Accountability Office (hereafter, GAO) to examine the effect of the wave of mergers that occurred in the U.S. petroleum industry in the 1990s. The GAO (2004) notes that market concentration, as measured by HHI, has increased substantially in the downstream segment of the U.S. petroleum industry since the 1990s. Market concentration in the wholesale gasoline refining industry increased substantially from the mid-1990s which by 2002, some petroleum refining states had become moderately concentrated in wholesale gasoline markets. The GAO (2004) concludes that mergers and increased market concentration, which reflects the cumulative effects of mergers and other competitive factors, generally led to higher wholesale gasoline prices. The motivation for this study stems from the above highlighted stakeholder concerns and the potential effects of the series of significant mergers, acquisitions and joint ventures that started in the late 1990s and led to increased concentration in the U.S. refining industry. Based on the result of Andrews (1993) test for structural change in the wholesale gasoline markets as a result of the major mergers, this study incorporates a measure of concentration in an asymmetric error correction model to test for the effect of market concentration on the speed of wholesale gasoline price adjustment to costs shocks represented by crude oil price changes. This is to establish how market concentration affects the speed of price adjustment. Finally, I investigate how market concentration and refinery capacity utilization affect short run price adjustment in the presence of cost shocks. This is because market structure is determined in part by market concentration and refiners could potentially use their refining capacity as a tool for influencing their supply, which could affect gasoline prices, in the presence of crude price shocks. Most of the empirical studies in the literature on the U.S. gasoline market have used information and data that predates the series of major mergers in the U.S. oil industry. This makes this study the first to investigate the effects of market structure, measured by market concentration and refinery capacity utilization, on the response patterns of wholesale gasoline prices to crude oil price shocks using information on the recent increased market concentration in the U.S. refining industry. This increased concentration as a result of the consolidation of firms' assets could lead to a significant change in refining capacity and capacity utilization. Unlike previous studies, the analyses in this study are based on formal econometric tests of symmetry and the resulting cumulative adjustment functions. This study focuses on the Gulf Coast, Los Angeles and New York wholesale spot gasoline markets. I choose to examine these regional markets because of the availability of wholesale gasoline spot price data and the uniqueness of these markets. The Gulf Coast market is known to be self sufficient as it produces and supplies the region with refined gasoline products from crude oil produced and refineries located in the Gulf Coast. The Los Angeles market produces the majority of its own unique brand of gasoline but imports some refined products from the Gulf Coast, while the New York market receives most of its refined gasoline from producers in PADD 1, the Gulf Coast and Canada.5 I find evidence of a structural break in the adjustment pattern of wholesale gasoline prices in the refining markets of Gulf Coast, Los Angeles and New York around the period of major mergers, and this reinforce the resolve to examine if changes in market concentration led to this shift in response pattern of gasoline prices to crude oil price changes post mergers. I find that market concentration has a significant effect on the speed of price adjustment in the response of wholesale gasoline prices to crude price shocks in only the New York market but I did not find support for the assertion that increased market concentration leads to downward price stickiness. Furthermore, the signs on the coefficients of market concentration effects on price dynamics in the models suggest downward price stickiness in only the Gulf Coast market. Market concentration and refining capacity utilization have a significant asymmetric effect on refiner's short run price adjustments to crude price changes in the Los Angeles and New York markets. In the Gulf Coast, as market concentration increases, short run price adjustment becomes more symmetric. Overall, the results suggest that market concentration does not appear to have a strong effect on the dynamics of price adjustment. The next section gives a brief background into the recent mergers, acquisitions and joint ventures in the U.S. oil industry and Section 3 discusses the issue of sticky gasoline prices and its related literature. Section 4 explains the data, Section 5 specifies the econometric models used to test for price asymmetries and how market structure, measured by market concentration and refinery capacity utilization, affects wholesale gasoline price adjustments; Section 6 presents and discusses the results of the econometric models and symmetry tests, while Section 7 concludes the paper.

نتیجه گیری انگلیسی

This study has re-examined the issue of price adjustment in the transmission of upstream price shocks to downstream gasoline prices by investigating how market structure, measured by market concentration and refinery capacity utilization, affects the adjustment of wholesale gasoline prices to crude price shocks. This study approaches the question in a novel manner, by first examining the existence of any structural change in the pattern of price adjustment around the period of major mergers which could have been as a result of the series of the major mergers in the petroleum industry. I find structural breaks in the adjustment pattern of wholesale gasoline prices in the three regional refining markets examined around the period of major mergers. This reinforced the resolve to examine if changes in market concentration led to this shift in the response pattern of gasoline prices to crude oil price changes post mergers. There is no theory relating market structure to asymmetric speed of adjustment neither has the relationship between market structure and asymmetric speed of adjustment been empirically tested using information on the recent series of big mergers that occurred in the U.S. petroleum industry. Also, there has been no test for the effect of market structure on short run price adjustments, thus making this the first attempt to investigate the effects of market structure on various aspects of price adjustment in the wholesale gasoline markets as there is much evidence of increased market concentration in the industry. I use HHI and refining capacity utilization in the ASECM to investigate how market structure affects the speed of price adjustments and firms short run response to crude price changes. The differences in the point estimates of the parameters of the model point to the lack of uniformity in the speed of price adjustment when crude oil price rises or falls. I did not reject symmetric speed of adjustment of wholesale gasoline prices to crude oil price changes in the three wholesale gasoline markets examined. This result is consistent with Bachmeier and Griffin (2003) results of symmetric pattern of adjustment in wholesale gasoline market using the Houston, Texas regional bulk price. I find that the market concentration effects on the speed of gasoline price adjustment is neither economically nor statistically significant in the three markets. This suggests that market concentration does not dramatically influence the speed of gasoline price adjustment in the three markets. Market concentration is found to affect refiners short run adjustment to crude price increases and decreases. Generally, the immediate pass-through of crude shocks to wholesale gasoline prices when there is a change in market concentration, is higher when crude price increases than when it falls. The immediate short run adjustment results support Bedrossian and Moschos (1988) notion that price adjustments can be effectively coordinated and industry equilibrium restored fairly rapidly as industrial concentration increases. Overall, the results suggest that market structure, measured directly by market concentration and indirectly by refinery capacity utilization, affects the dynamics of price adjustment in the three wholesale gasoline markets examined, but the effects are not strong enough to suggest that the increased market concentration, due to the recent mergers in the U.S. petroleum refining industry, gives refiners market power to substantially influence the pattern of gasoline price adjustments to crude price shocks. The insignificant asymmetric effect of market concentration on speed of adjustment suggests that other factors such as oil price volatility, which is generated by oil price changes, and inventories may be more important in price adjustment dynamics. However, Slade and Thille (2005) show that price volatility is lower in concentrated markets while Radchenko (2005b) finds that gasoline prices become more symmetric as oil price volatility increases. Extrapolating from these studies, we could infer that an increase in market concentration, which leads to a decrease in volatility, could ultimately lead to asymmetric gasoline price adjustment. Our insignificant asymmetric effect of market concentration on speed of adjustment may also be as a result of our inability to disentangle the effects of market concentration and oil price volatility on wholesale price adjustment dynamics. Thus, there is an identification problem of whether more symmetric response of gasoline price is due to increased market concentration (independent of gasoline price volatility caused by oil price volatility) or increased oil price volatility. This is an interesting area of research which I intend to look at in a future study.

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