Understanding Gasoline Price Dispersion

This paper models and estimates the gasoline price dispersion across time and space by introducing and using a unique gasoline price data set at the gas-station level within the U.S.. Nationwide effects (measured by time fixed effects or crude oil prices) explain up to about 51% of the gasoline price dispersion followed by the contributions of refinery-specific costs up to about 33% (which have been ignored in the literature due to using local data sets), state taxes about 12%, and spatial factors (such as local agglomeration externalities, land prices, distribution costs of gasoline) up to about 4%. The contribution of brand-specific factors are relatively minor