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This paper investigates the extent of convergence club formation in retail gasoline prices. Our study provides new insights through the use of a large disaggregated panel database for Canada that comprises three types of gasoline grades, namely regular, medium and premium, for a sample of 44 cities over a period of almost two decades. The paper ana...
Citations
... However, the proportion of cities experiencing convergence declines significantly from 2006 onwards. In their study, Holmes et al. (2021) explored the Canadian retail gasoline markets and found evidence suggesting that these markets are not integrated, regardless of employing prices being either net or inclusive of taxes. Akhmedjonov and Lau (2012) investigated price convergence within the Russian energy market across four energy products: diesel, gasoline, electricity, and coal. ...
This study deals with the evolution of fuels’ prices over time in the EU. The central research inquiry revolves around whether there exists any correlation among the trajectories followed by national prices in the gasoline and diesel markets. The EU, and more specifically the Euro-Area, by its construction, is treated as an OCA (Optimum Currency Area). In an OCA, certain conditions are met to ensure the smooth functioning of a common currency. The fuel price synchronization is essential because it contributes to the effective implementation of policies and promotes stability across the entire macroeconomy. The study covers the period of 2017–2022. For each type of fuel and year, we construct an individual network where network nodes represent the EU member states while the edges connecting these nodes represent strong temporal fuel price correlations among the member states. The properties of the resulting networks are analyzed within a Complex Network framework. Our goal is twofold: first, to detect any potential convergence or divergence in the trajectories of the prices, and second, to investigate the impact of tax and duty implementation on the co-movements of the prices. The empirical findings show that diesel markets have a more pronounced pattern of price co-movements compared to the gasoline markets. Moreover, the application of fuel taxation policies seems to adversely affect the co-movements of prices.
... Better regional price information could therefore make government programs more effective and efficient. Better regional price information could also inform private investment by identifying low-cost areas or identifying grades of integration through price convergence (Holmes et al. 2022). This article explores how Big Mac prices vary across time and space to help assess how they can help in understanding the magnitude and direction of localized price changes. ...
... In the United States, the consumer price index is based on a basket of goods, which is measured only in urban areas. Therefore, regional price convergence studies tend to focus only on urban CPI and price movements only (e.g., Burridge et al. 2015 or more recently, Holmes et al. 2022). ...
Difference in terms of cost-of-living between rural and urban areas is a frequent theoretical analysis in Regional Economics. Lack of routine measures in rural areas does not usually allow to observe changes in rural costs. We adapt the Big Mac index, typically used to measure purchasing power parity between countries, as a potential quick and inexpensive indicator of short-term local price variations. With a national random sample of McDonald's stores repeated in time, we find prices grew slightly faster in rural areas than in urban areas. Spatial transmission of prices seems to be limited to very localized effects, meaning that rural price increases are not due to urban spillover effects.
