Do Retail Gasoline Prices Adjust Symmetrically to Crude Oil Price Changes? The Case of the Greek Oil Market

The purpose of the present paper is to test for asymmetry in the Greek retail gasoline price adjustments to crude oil price changes for the period January 2005-July 2012.The empirical analysis provides evidence that the adjustment of gasoline prices to oil price changes is asymmetric, in contrast to findings of previous studies which have applied other, less robust econometric techniques. Asymmetric adjustment implies a strategy, according to which market participants delay lowering the retail gasoline prices when crude oil prices fall, but rush to increase them when crude oil prices rise, in an effort to maximise profits. Such a strategy may be the result of non-competitive conditions in the structure of the fuel market in Greece