RETAIL PRICE ASYMMETRIES IN LOCAL GASOLINE MARKETS

The experience of the Salt Lake City retail gasoline market during the 1989 to 1993 period suggests that there was asymmetric adjustment. Wh olesale and retail price data, unique to the Salt Lake market, are use d to test for the existence of three types of price asymmetry during t his period. With respect to the magnitude of the pass through of whole sale price changes, evidence of price asymmetry during periods of aver age weekly wholesale price changes is found. However, during market sh ocks, the evidence points in the direction of retail price symmetry. E vidence of asymmetry with respect to the timing and pattern of the ret ail price response is found for periods of both average and market sho ck changes. Since gasoline is purchased by the consumer in local marke ts, conclusions reached by studies of market pricing behaviour that re ly on national data may not be relevant for local policy decisions. Th is appears to be the case for the Salt Lake City market.