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Title

The Effect of Market Isolation on Competitive Behavior in Retail Petrol Markets.

Authors

Ghazanfari, Arezoo; Razmjoo, Armin

Abstract

Regarding the importance of energy for societies, this study examines the characteristics of the petrol price cycle in Perth, Australia. Given the micro-and macro-economic changes, the study's purpose was to determine whether the Edgeworth features of the cycle are robust and resilient to market changes. The contribution is to extend previous studies, evaluate Edgeworth's consistency, and capture several episodes of economic activity that have been unexplored. The findings showed a frequent and asymmetric weekly cycle that is characterized by decreasing prices over six consecutive days, followed by a large price jump in one day. The average price rise in the relenting phase for major stations was 14.10 cents per liter (CPL) and 13.14 CPL for independents. For the major and independents, the daily average price drops in the undercutting phase were 2.25 and 1.92 CPL, respectively. Despite the market changes, Edgeworth's cycle characteristics, cycle duration, and the stations' role have remained stable during the last 15 years, but peak and trough days have changed. The study is crucial as it provides insights into the robustness of price cycles and competition during significant downturns and prolonged periods of growth. This analysis is critical from a regulatory, policy, and consumer welfare perspective. Furthermore, this paper investigates future petrol consumption in light of renewable energy developments.

Subjects

PERTH (W.A.); COMPETITION (Psychology); ENERGY consumption of lighting; GASOLINE; CYCLING competitions; ENERGY development

Publication

Sustainability (2071-1050), 2022, Vol 14, Issue 13, p8102

ISSN

2071-1050

Publication type

Academic Journal

DOI

10.3390/su14138102

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