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Sustainability 2017, 9(3), 381; doi:10.3390/su9030381

Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices

1
Center for Studies of Modern Business, Zhejiang Gongshang University, Hangzhou 310018, China
2
School of Economics, Zhejiang Gongshang University, Hangzhou 310018, China
3
School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China
*
Author to whom correspondence should be addressed.
Academic Editors: Liexun Yang, Peng Zhou and Ning Zhang
Received: 16 January 2017 / Revised: 27 February 2017 / Accepted: 28 February 2017 / Published: 7 March 2017
View Full-Text   |   Download PDF [3009 KB, uploaded 7 March 2017]   |  

Abstract

This paper employs an asymmetric error-correction model (AECM), and uses monthly data on wholesale prices of gasoline and diesel products in China and international crude oil prices from February 2006 to October 2013 to examine whether China’s gasoline and diesel prices adjust asymmetrically to international crude oil price changes. Our empirical results suggest that increases and decreases in international oil prices have asymmetric effects on both wholesale prices of gasoline and diesel fuel in China, and that both increases and decreases in international oil prices have a greater effect on diesel prices than on gasoline prices in China. If there is no change in the maximum retail price, the asymmetry results from the transmission of wholesale prices in China with international oil prices. However, if there is a change in maximum retail prices, both international oil prices and maximum retail prices cause the asymmetry. View Full-Text
Keywords: gasoline price; diesel price; asymmetry; transmission; maximum retail price gasoline price; diesel price; asymmetry; transmission; maximum retail price
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Chen, Y.; Huang, G.; Ma, L. Rockets and Feathers: The Asymmetric Effect between China’s Refined Oil Prices and International Crude Oil Prices. Sustainability 2017, 9, 381.

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