Fondazione Eni Enrico Mattei
Rockets and Feathers Revisited:
An International Comparison on
European Gasoline Markets
Marzio Galeotti*, Alessandro Lanza** and
Matteo Manera***
JANUARY 2002
CLIM – Climate Change Modelling and Policy
*University of Bergamo and Fondazione Eni Enrico Mattei
**Eni S.p.A., Fondazione Eni Enrico Mattei and CRENos
***Bocconi University
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SUMMARY
This paper re-examines the issue of asymmetries in the transmission of
shocks to crude oil prices onto the retail price of gasoline. Relative to the
previous literature, the distinguishing features of the present paper are: i)
use of updated and comparable data to carry out an international
comparison of gasoline markets; ii) two-stage modeling of the
transmission of oil price shocks to gasoline prices (first refinery stage and
second distribution stage), in order to assess possible asymmetries at
either one or both stages; iii) use of asymmetric error correction models to
distinguish between asymmetries that arise from short-run deviations in
input prices and from the speed at which the gasoline price reverts to its
long-run level; iv) explicit, possibly asymmetric, role of the exchange rate,
as crude oil is paid for in dollars whereas gasoline sells for different sums
of national currencies; v) bootstrapping of F tests of asymmetries, in order
to overcome the low-power problem of conventional testing procedures.
In contrast to several previous findings, the results generally point to
widespread differences in both adjustment speeds and short-run
responses when input prices rise or fall.
Keywords: Gasoline prices, speed of adjustment, asymmetric adjustment,
exchange rate
JEL: C220, D400, Q400
CONTENTS
1.
Introduction
2
2.
Price asymmetries in gasoline markets:
4
what economic theory says
3.
Price asymmetries in gasoline markets:
6
what the applied literature says
4.
Data and econometric methodology
10
5.
Empirical results
13
6.
Conclusions
17
References
19
ROCKETS AND FEATHERS REVISITED:
AN INTERNATIONAL COMPARISON ON
EUROPEAN GASOLINE MARKETS
1. Introduction
Drivers throughout the world are very sensitive to the money they pay for the fuel consumed by
their car or truck. Because individual mobility is so essential – or, in economists’ jargon, because
gasoline demand is so inelastic – a reduction in the price of gasoline makes drivers very happy just
as a price rise makes them very upset. Or: very, very upset in the latter case while only very happy
in the former?
This paper deals with the transmission of positive and negative changes in the price of oil to the
price of gasoline. There is a sizeable literature looking for empirical evidence in support of
asymmetries in this transmission mechanism: allegedly, gasoline prices go up faster than they go
down whenever there is turbulence in international crude oil markets. Indeed, in every recurring
period of tension in the price of oil there has been renewed interest and even heated debate about
the level of gasoline prices, the magnitude of its cost components, including retailers’ margin, and
the taxes that contribute to keep those prices high and sluggish. The debate invariably centers on the
fact that gas prices do not decrease so rapidly as oil prices do.
Asymmetries in the transmission of changes in the price of oil are in general possible if gasoline
markets are non-competitive. Indeed, unlike the case of perfect competition, varying degrees of
price rigidity are a feature of oligopolistic and monopolistically competitive markets. Economic
theory offers a few explanations of such price rigidity, and these often contemplate the possibility of
an asymmetric transmission of cost changes onto product prices.
However, perhaps because structural models of asymmetric price effects are not easily translated
into empirical models, the literature on gasoline prices has typically employed reduced-form
dynamic equations relating the price of gasoline to the price of oil. Findings vary across countries
and periods, but on the whole they do not provide firm evidence that prices rise faster than they fall.
To date, therefore, the empirical evidence does not seem to justify the blame that the press, public
2
opinion, some political groups and environmentalist movements put on the oil industry particularly
in periods of highly volatile prices.
This paper provides fresh new evidence to bear on the issue of price asymmetries in gasoline
markets: are they real or are they only imaginary as people tend to pay attention to gasoline prices
only when they are rising rapidly?
In this paper we study potential price asymmetries in the markets of leaded gasoline of five
European countries, namely Germany, France, U.K., Italy, and Spain. The data are monthly and in
general range from the 1985 to 2000. Relative to the previous literature, the paper is novel in
several respects.
First of all, the paper presents an international comparison employing the same empirical model and
estimation technique and using a very recent, comparable data set. The fact that no unanimous
conclusions could be drawn by previous individual country studies may, among other things,
depend upon the fact that no similar data across countries for a uniform time period were used.
A second consideration concerns the econometric methodology and the dynamic model used to
assess price asymmetries. In this paper an error correction mechanism (ECM henceforth) is
estimated throughout after applying modern unit root and cointegration techniques. Relative to
partial adjustment, “old-fashioned” ECM and general dynamic models, we are here able to
distinguish between two types of asymmetries: the first refers to the fact that adjustment of current
price levels to desired targets may differ depending on the sign of the adjustment, the second one
instead has to do with asymmetries in transitory price movements.
A third aspect that distinguishes the present contribution is a more satisfactory consideration of the
organizational structure of the industry under scrutiny. The majority of previous studies investigated
the relationship between crude oil and retail gasoline prices as a single stage process. However, the
industry has a more complex structure, often varying country by country. We may make a small
step forward and roughly suppose the existence of two stages in the production and distribution
process: the first one concerns the transformation of crude oil into the refined product, while the
second one has to do with the distribution of gasoline to retailers. The relevant prices involved in
the first stage, therefore, are crude oil price and ex-refinery price. In addition, since crude oil is paid
for in dollars whereas gasoline sells for different sums of national currencies, the exchange rate
3
plays a relevant, possibly asymmetric, role at this stage. The subsequent stage instead deals with the
relationship between ex-refinery and retail gasoline prices. We think that this strategy provides a
more satisfactory representation of the complex chain linking crude oil to pump prices. Moreover,
we believe that it is of interest to find out whether price asymmetries originate upstream or
downstream in the transmission process: in view of the suspicions of collusive behavior that often
accompany increases in retail gasoline prices, the two stage nature of our investigation is clearly
useful.
A final point made in the paper is methodological. A few applied studies employing the asymmetric
ECM model have recently documented that the commonly used F-tests of equality among the
coefficients accounting for the asymmetries are biased toward accepting the null of symmetry in
small samples. This fact could explain why the data fail to turn up the asymmetric price adjustments
that many commonly suspect. A way around this technical difficulty is to bootstrap the asymmetry
tests. We carry out this task in the paper and present results from both standard and bootstrapped
test outcomes.
The results of the estimated parameters generally point to widespread differences both in
adjustment speeds and short-run elasticities when input prices rise or fall. This appears to confirm
the common perception that price increases are larger than price reductions. This finding
characterizes, albeit to a different extent, nearly all countries and both stages of the transmission
chain. Conventional tests, however, fail to reject the symmetry hypothesis. Yet, drawing from a few
contributions which have addressed this specific aspect in related contexts, we have reasons to
believe that those usual tests have low power when samples are of limited size. We therefore
bootstrap the F statistics and report rejection frequencies of our tests. The results strongly confirm
the emergence of widespread price asymmetries in the data we have examined.
The paper is structured as follows. We begin in the next section with a cursory review of theoretical
explanations of price rigidity and asymmetric price effects. In section 3 we provide a brief overview
of the literature on gasoline prices. Section 4 describes the data and the econometric methodology
adopted in the paper. The results are presented and discussed in section 5. Concluding remarks
close the paper.
4
2. Price Asymmetries in Gasoline Markets: What Economic Theory Says
A necessary condition for the presence of asymmetric price effects is price rigidity, which gives rise
to sluggish adjustment of output prices to shocks in cost conditions. However, according to
Peltzman (2000) “economic theory suggests no pervasive tendency for prices to respond faster to
one kind of cost change than to another” (p.467). Yet, there are a number of more or less standard
arguments that can be put forth concerning the issue of asymmetric adjustment.
To begin with, profit maximizing behavior forces firms in competitive markets to adjust their prices
to new cost conditions immediately, and presumably symmetrically. This holds when frictions and
imperfections are absent from markets.
Menu costs, however, preclude instantaneous price adjustment even if firms have no market power.
Similarly, accountancy rules and inventory valuation may be responsible for the sluggish
adjustment of final prices with respect to increase or decrease of major exogenous variables. Take,
for example, inventory valuation.
As is well known, there are two generally accepted ways of valuing products held by a firm, one based
on historical costs and the second based on replacement costs. When a historical criterion (FIFO) is
adopted to value inventories, the firm does not adjust its output price immediately when costs change,
but awaits until the stocks of inputs bought at the old price are depleted. When instead a replacement
cost criterion (LIFO) is applied, the firm adjusts its price very rapidly in response to changes in input
costs. The accounting convention chosen by a firm can therefore have an influence on the speed of
adjustment: application of a FIFO criterion results in longer lags than in the case of a LIFO principle.
Market power is probably the greatest concern to those who observe that gasoline prices respond more
quickly to oil price increases than when they fall. The standard argument goes as follows. Retailers
allegedly try to maintain their “normal” profit margins when prices rise, but they try to capture the
larger margins that result, at least temporarily, when upstream prices fall. In both cases the situation is
not to last because, for instance, consumer search costs are present. When costly search is completed,
profits go down and prices tend to competitive levels. A version of this story that emphasizes tacit
collusion in oligopolistic markets notes that, when upstream prices rise, each firm is quick to increase
its selling price in order to signal its competitors that it is adhering to the tacit agreement; when
5
upstream prices fall, it is slow in adjusting its price because it does not want to run the risk of selling a
signal that it is cutting its margins and breaking away from the agreement.
Finally, another argument is the fact that adjusting production is costly. When a cost shock occurs
profit maximizing competitive firms absorb part of the shock by depleting inventories when input
prices fall and storing output when they rise. This leads prices not to immediately adjust to cost shocks
even in competitive markets, although it is perfectly consistent with firms enjoying market power.
According to Borenstein, Cameron, and Gilbert (1997), asymmetry is consistent with the above story if
the net marginal convenience yield (the change in net distribution costs resulting from a change in
inventory levels) is convex. In this case cost increases will be accomodated more quickly.
Coming back to Peltzman (2000)’s examination of “literally hundreds of markets” (p.469), the
author finds that neither inventory holdings nor menu costs seem a key ingredient in producing
price asymmetries. The hypothesis of asymmetric costs of input adjustment appears to be more
consistent with price asymmetry. More generally, price asymmetry is as characteristic of
competitive as oligopoly market structures.
3. Price Asymmetries in Gasoline Markets: What the Applied Literature Says
Numerous attempts have been made to analyze the relationship between the price of the input
(crude oil in the present case) and the price of the corresponding output (here petroleum products).
The product which has been most studied is gasoline because its share of petroleum consumption is
large and because the wide geographical dispersion of sales (relative to the total volume sold) gives
rise to a diversity of market situations within a single country.1
About a dozen studies have specifically dealt with the issue of the asymmetric transmission of price
changes in gasoline markets. These studies generally differ in one or more of the following aspects:
the country under scrutiny; the time frequency and period of the data used; the focus on wholesale
and retail gas prices or on oil and gasoline prices; the dynamic model employed in the empirical
investigation.
1
Unlike previous studies, which have documented price asymmetries in selected markets (including gasoline, bank
deposits, agricultural products), Peltzman (2000) uses large samples of diverse products: 77 consumer and 165
producer goods.
6
The problem of a different response to price increases and decreases is first considered in Bacon
(1991)’s work on the U.K. gasoline market, which is however limited to the second stage of the
transmission chain (the ex-Rotterdam spot price is used as a proxy of the product price).2 Biweekly
data are used for the period 1982-1989. The author finds that increases in the product price are fully
transmitted within two months, in the case of price reductions an extra week is necessary.
Moreover, changes in the exchange rate necessitate two extra weeks relative to product prices
before being incorporated in retail gas prices.
Manning (1991) looks directly at the impact of changes in oil prices on U.K. retail prices. The data
are monthly for 1973-1988 and an ECM specification allowing for asymmetry only in the dynamic
part of the equation is used. Weak and non-persistent asymmetry in price changes, which is
absorbed within four months, is found. No formal tests of asymmetric price effects are however
performed.
Shifting attention to the U.S., Karrenbrock (1991) employs 1983-1990 monthly data to study the
empirical relationship between wholesale and (after tax) retail gasoline prices. The author uses a
distributed lags model to find that the length of time in which a wholesale price increase is fully
reflected in the retail gasoline price is the same as that of a wholesale price decrease for premium
and unleaded regular gasoline. Instead, wholesale price increases for leaded regular gasoline are
passed along to consumer more quickly than price decreases. Nevertheless, the author concludes,
contrary to the popular belief that consumers do not benefit from wholesale gasoline price
decreases, these are eventually passed along to consumers as fully as are wholesale gasoline price
increases.
Lanza (1991) chooses the Federal Republic of Germany as the country to study. The period is 19801990, thus including the oil price collapse of 1986. The analysis is structured in two stages, employs
monthly data and is based on an asymmetric partial adjustment model: the dependent price variable
(wholesale or retail gasoline price) responds to its lagged value differently depending upon positive
or negative changes in the price explanatory variable (crude oil or wholesale price respectively).
The author’s findings are: (i) at the refinery level there is only weak evidence of asymmetric
2
Although not directly testing for asymmetric price changes, Bacon (1986) is probably the first study to structure the
analysis of pricing in gasoline markets into two stages: first the relationship between crude oil price and factory gate
product prices, and then the relationship between product prices and net of tax retail prices. The data refer to the
United Kingdom and are monthly covering the 1977-1985 period. The fitted equation is specified as an
autoregressive-distributed lag. The author finds that crude oil price changes are passed on to refinery prices quickly,
7
reaction (the average lag is about three months); (ii) at the consumers’ level the speed of adjustment
is lower in the case of price reductions than for price rises.
Kirchgässner and Kübler (1992) also look at West Germany for the period 1972-1989 using
monthly data. The authors consider the response of both consumer and producer leaded gasoline
prices to the spot price on the Rotterdam market; they distinguish two periods, before and after
January 1980. The methodology adopted is very rigorous: the time series are tested for,
respectively, unit roots, Granger causality, cointegration, and structural breaks. When cointegration
cannot be rejected, both symmetric and asymmetric ECMs are fitted. Unfortunately, the asymmetry
is permitted only for price changes, thus allowing only for a different response in the short-run but
not in adjustment speeds. Briefly stated, the results show that, while long-run reactions are not
significantly different for the 1970s and the 1980s, there is considerable asymmetry in the former
period but not in the latter in the short-run adjustment processes. In particular, reductions in the
Rotterdam prices are transferred faster to German markets than increases.
Shin (1994) relates the average wholesale price of oil products to the price of oil in his investigation
of the U.S. market. He uses monthly data for the period 1986-1992; his dynamic model quite simply
regresses average wholesale price changes on positive and negative oil price changes and shows no
evidence of short-run asymmetric effects.
The focus of Duffy-Deno (1996) is again on the U.S., and in particular on the downstream
relationship between wholesale and net-of-tax-retail gasoline prices. The data this time are weekly
for 1989-1993 and the econometric model, a general unrestricted distributed lag specification,
shows strong short-run and long-run asymmetries, with a fuller, longer (4 weeks) adjustment in the
case of price rises and an incomplete, shorter (2 weeks) adjustment for price falls.
Borenstein, Cameron, and Gilbert (1997) study the U.S. gasoline market using weekly data for
1986-1992. The empirical investigation confirms the common belief that retail gasoline prices react
more quickly to increases in crude oil prices than do decreases (4 weeks versus 8 weeks). An ECM
is estimated but, like the previous paper, only asymmetry for price changes is permitted.
Balke, Brown, and Yücel (1998) extend the work of Borenstein et al. (1997) by using two different
model specifications with weekly data from 1987 through 1997. In particular the authors use a
within the current month; this is not so for changes in product to retail prices, whose adjustment is much slower,
8
distributed lags model in the levels of prices with asymmetric effects and an ECM representation
which allows for both long-run and short-run asymmetries.3 On the basis of an encompassing test
this last specification is preferred. Both models involve three prices, with the wholesale price
depending upon oil and spot prices and the retail price upon wholesale and spot prices. The authors
do not obtain unambiguous evidence concerning asymmetry, being weak in the specification in
levels and moderate and persistent in the ECM.
Reilly and Witt (1998) go back to the U.K. market to revisit the evidence of Bacon (1991) and
Manning (1991) with monthly data for 1982-1995 and emphasizing the role of the dollar-pound
exchange rate and the potential asymmetries associated with it, in addition to those of crude oil
prices. A restricted ECM is estimated which allows only for short-run asymmetry. The hypothesis
of a symmetric response by petrol retailers to crude price rises and falls is rejected by the data, and
so is for changes in the exchange rate.
Finally, three recent papers look at the experience of other countries. Godby, Lintner, Stengos, and
Wandschneider (2000) study the Canadian market for both premium and regular gasoline. The
analysis is based on weekly data for thirteen cities between 1990 and 1996. By noting that the
asymmetric ECM specifications used in previous studies are misspecified if price asymmetries are
triggered by a minimum absolute increase in crude cost, a Threshold AutoRegressive model within
an ECM is implemented in the paper. On this basis the authors fail to find evidence of asymmetric
pricing behavior.
Asplund, Eriksson, and Friberg (2000) investigate the Swedish retail market by fitting a restricted
ECM with asymmetries only on the short-run dynamic components. The data are monthly and cover
the period 1980 through 1996. There is some evidence that in the short-run prices are stickier
downwards than upwards. Also, prices respond more rapidly to exchange rate movements than to
the spot market prices.
Berardi, Franzosi, and Vignocchi (2000) study the Italian lower end of the market considering the
retail price of both leaded and unleaded gasoline as a function of Platt’s Med ex-refinery price. The
data are weekly 1991-2000 and are used in the estimation of an ECM specification which allows for
3
although the speed of reaction does not appear to differ between product price and exchange rate changes.
Both in Borenstein et al. (1997) and in Balke et al. (1998) the restriction represented by the long-run level relationship
is not imposed (no cointegration analysis is performed) in the ECM. This implies that the long-run asymmetry
introduced in the second paper applies to the different parameters of the price level variables and not to the error
correction coefficient.
9
asymmetries both in the long-run and short-run components. The authors conduct formal tests of
equality between coefficients associated with these asymmetries and find that the hypothesis of a
differential response in the long-run is rejected, while the evidence is less clear-cut for the short-run
(symmetry is rejected at 5% for unleaded but not for leaded gasoline; at 1% symmetry is always
rejected).
Summarizing, most previous articles have studied markets of individual countries, most often the
U.S. and U.K. The period usually investigated covers the 80s and 90s, although Manning (1991)
looks back at the period after 1973 and Berardi et al. (2000) arrive at year 2000. The frequency of
the data is typically either weekly or monthly, although sometimes biweekly data are also
employed. In general the contributions surveyed consider the lower end of the market, the one in
which the product is distributed and sold to the pump. The relevant prices involved are therefore
some wholesale price and the retail price. The other prevailing type of analysis is the one that in a
single stage relates the price of crude oil to the pump price. Lanza (1991) appears to be the only
study to analyze asymmetries in both stages of the transmission chain of cost shocks to the final
gasoline prices. Finally, only a few recent papers make use of the latest developments in time series
econometrics: by rigorously testing for unit roots and finding evidence of long-run cointegrating
relationships between the relevant prices, it is possible to model, estimate and test for asymmetric
price effects both in the short-run and long-run.
4. Data and Econometric Methodology
We represent the complex chain of transformation of crude oil into the refined gasoline product as a
two-stage process: first we consider the transformation of oil into the refined product, and then its
distribution to gas stations. Of each stage we investigate the potential asymmetries in the
transmission of input price changes onto output prices. For the sake of comparison with the bulk of
the literature and in order to appreciate the advantages of a two-stage representation, we also
consider the transmission of changes in crude oil prices directly on the price of gasoline.
We conduct an international comparison of the issue at hand among five European countries,
namely Germany, France, U.K., Italy, and Spain. The sample period ranges from January 1985 to
June 2000 (the German sample stops at February 1997) and leaded gasoline has been considered.4
4
We have chosen this sample for at least two reasons. In terms of product and geographical coverage, we want to have
an idea of possible price asymmetries, taking into account that leaded gasoline has been very important over the
10
The variables used in this paper are the price of crude oil (C), the gasoline spot price (S), the beforetax gasoline retail price (R), and the exchange rate between U.S. dollar and individual national
currencies (ER). We denote the natural logarithm of these variables by lowercase letters. In
particular, crude oil price is the Crude Oil Import Costs in U.S. dollars/bbl (average unit value,
c.i.f.) published by the International Energy Agency. As a proxy for the ex-refinery gasoline price
we use the gasoline spot price f.o.b. Rotterdam for the European countries.5 The gasoline retail
prices are also from the International Energy Agency. Since any company purchasing in the spot
market must pay in dollars, the exchange rate between the national currency and U.S. dollar is used.
These series are taken from the International Monetary Fund. As already emphasized by Bacon
(1991), it is clear that the exchange rate may be a relevant source of asymmetry in non-U.S.
countries. Hence the importance of allowing separately for positive and negative changes in
exchange rates.
Summarizing, the basic relationships we take to the data are the following:
st = a 0 + a1ct + a 2 ert + ε t
(1)
rt = a 0 + a1 s t + ε t
(2)
rt = a 0 + a1ct + a 2 ert + ε t
(3)
Equations (1)-(3) represent the long-run or equilibrium relationships relating output prices to input
prices and exchange rates. Equation (1) refers to the first stage in which the price of crude oil, along
with the exchange rate, determines the spot gasoline price; according to (2) this price affects the
retail price of gasoline. It is apparent that the exchange rate enters only the first stage of the chain as
both retail and spot prices are denominated and posted in the same national currency.6 Finally, (3)
relates in a single stage the retail price of petrol to that of crude oil.
sample period in the European countries. In terms of time period, we start from right before the 1986 oil price
collapse until the most recent months. Finally, the reason why the German sample stops at a different date is due to
the unavailability of the relevant information from the official source of our data.
5
More information on gasoline spot prices can be found in “General Note on Definition Methods and Source”
published in the quarterly statistics Energy Price and Taxes of the International Energy Agency, Paris.
6
Note that in principle the coefficient in front of the exchange rate should be the same as that of crude oil price. We do
not impose such restriction. In addition, the influence of sources of costs other than the relevant prices (and exchange
rate) are considered to be negligible and relegated into the disturbance term. Finally, in order not to clutter notation
we have maintained the same symbols for coefficients and disturbance term of different equations.
11
The asymmetry in the transmission of changes in input prices to output prices can be accomodated
within a dynamic model. However, it is important to distinguish between two types of asymmetries.
This distinction can be best entertained by a dynamic ECM specification estimated in two steps.
That is, let εˆt denote the residual of (1) through (3) and define ECM t( + ) = εˆt > 0 and
ECM t( − ) = εˆt < 0 .7 These two terms account for asymmetry in the adjustment to equilibrium,
whereas short-run asymmetry is captured by similarly decomposing price (and exchange rate)
changes into ∆xt( + ) = xt − xt −1 > 0 and ∆xt( − ) = xt − xt −1 < 0 for x=c,s,er. Thus asymmetry of the first
type is related to the speed at which a gap between the current and the equilibrium level (as
described by the long-run relationships (1)-(3)) of spot or retail prices is filled within the period.
This speed can differ according to whether the current price is below or above its equilibrium level.
The asymmetric ECMs can therefore be formulated as follows:
∆s t = α + β ( + ) ECM t(−+1) + β ( − ) ECM t(−−1) + γ ( + ) ∆ct( + ) + γ ( − ) ∆ct( − )
+ δ ( + ) ∆ert( + ) + δ ( − ) ∆ert( − ) + u t
∆rt = α + β ( + ) ECM t(−+1) + β ( − ) ECM t(−−1) + γ ( + ) ∆st( + ) + γ ( − ) ∆s t( − ) + u t
∆rt = α + β ( + ) ECM t(−+1) + β ( − ) ECM t(−−1) + γ ( + ) ∆ct( + ) + γ ( − ) ∆ct( − )
+ δ ( + ) ∆ert( + ) + δ ( − ) ∆ert( − ) + u t
(4)
(5)
(6)
where ∆ is the first difference operator. Recent advances in time series econometrics suggest that
the first step toward estimation of (4)-(6) is to check whether or not the different price series and
exchange rates are stationary. Augmented Dickey-Fuller (ADF) tests for unit roots have been used
and all variables have been found to be integrated of order one, or I(1), most of them with intercept
and trend.8 Though non-stationary, these series may form a linear combination which is stationary,
or I(0). In this case there are long-run or equilibrium relationships between relevant price series as
represented in (1)-(3). The relevant series are said to be cointegrated and this implies that the
residual of the equations εˆt is I(0). Again ADF tests are used to test for cointegration. OLS
estimation of (1)-(3) yields (super) consistent estimates of long-run responses of output prices to
7
8
The two ECM series take on only positive (resp. negative) values and zero otherwise.
Results from tests and estimation of (1) through (6) are not reported here to economize on space. We just concentrate
on results and tests concerning price asymmetries. The complete set of results is contained in an appendix available
from the authors.
12
changes in input prices and exchange rates. Finally, when two or more variables are cointegrated,
we know from the Engle-Granger representation theorem that they admit an ECM formulation of
the type (4)-(6).
All the above considerations apply to the case of symmetric effects, but the ECM has been extended
to the case of asymmetric adjustment originally by Granger and Lee (1989). In this case first
differences and cointegration residual can be decomposed into positive and negative changes as
shown above. We merely note here that in order to allow for asymmetric adjustment to long-run
equilibrium it is necessary to estimate the asymmetric ECM in two steps.9
5. Empirical Results
Tables 1 and 2 present the results from estimation of asymmetric price effects, whereas Tables 3
and 4 present the evidence of testing for price asymmetries.
5.1 Evidence on Asymmetric Adjustment Speeds and Short-run Price Asymmetries
Table 1 reports the magnitude and statistical significance of the adjustment speed coefficients β (+ )
and β (− ) , which allow us to evaluate long-run or persistent asymmetry, and magnitude and
significance of the coefficients of price changes γ (+ ) and γ (− ) , which instead account for short-run
or transitory asymmetry. The results suggest several remarks.
Firstly, the table shows that, with just five exceptions, all coefficients are statistically significant, in
the vast majority of cases at the 1% confidence level. According to Granger and Lee (1989), the
significance of individual coefficients is a necessary condition for testing for asymmetric effects.
Secondly, the comparison between “positive” and “negative” coefficients shows that the former in
general exceed, in absolute value, the latter. This holds for each stage of the production and
distribution chain and both for long-run and short-run. However, to establish significant divergences
between the two groups of parameters requires rigorous statistical testing, an aspect we tackle
below.
9
One could observe that estimation of equations (4)-(6) is affected by a a generated regressor problem, as the ECM
terms are obtained from the prior estimation of (1)-(3). While this is certainly reason for concern in the usual context,
McAleer, McKenzie and Pesaran (1994), among others, note that generated regressors cease to be a problem when
variables are non-stationary and cointegrated.
13
Thirdly, if we consider the two-stage approach we have adopted to describe the transmission chain
of price shocks to final gasoline prices relative to the single-stage practice, we see that numerical
estimates are very different. In particular, first-stage adjustment speeds are generally smaller in
absolute value than second-stage speeds, whereas the contrary appears to be true for short-run price
elasticities. These differences do not surface in the single-stage approach.
If we restrict our attention to point estimates, the picture that emerges appears to confirm the
general perception of a more rapid adjustment in the case of price rises relative to price falls. This
can be seen, as far as the short-run is concerned, by direct comparison of the estimated parameters
in that they represent contemporaneous price adjustments: in the majority of cases the coefficient γ
associated with price increases is larger than that corresponding to price reductions. There are
exceptions though, but the differences among coefficients do not appear to be large. It is clear that
in these cases a test of equality between coefficients is called for. As for the long-run, note that the
positive and negative β coefficients are respectively associated with adjustment to the long-run
equilibrium level of price from above and from below. Also these parameters differ in general. It is
however perhaps useful and more informative to use an alternative statistics based on those
adjustment speed coefficients.
5.2 Evidence on Asymmetric Adjustment
Table 2 presents evidence on this type of asymmetry by computing the number of weeks necessary
to close the gap between current and desired (long-run or equilibrium) levels of price. In particular,
we compute the following statistics:
 pt − p t* 

ln
* 
p
p
−
t 
t=  0
β
(7)
where the numerator is the log of the percentage gap closed and β is the speed of adjustment
coefficient estimated, for either upward and downward adjustments, in the ECM equations (4)-(6).
Formula (7) can be used to compute the number of weeks necessary to close x% of the gap between
actual and long-run price levels.10 Because monthly data are used in estimation, (7) becomes:
10
This statistics has been suggested and used in other contexts by Christiano and Eichenbaum (1987) and Eichenbaum
(1989). A full derivation of (7) is contained in an appendix available from the authors.
14
t=
30 ln(1 − x)
7
β
(8)
Letting x=50%, 95% Table 2 tells us how many weeks it takes for the price of gasoline to revert to
its equilibrium level once a shock has caused him to diverge upward or downward. The results
show that it often takes less time to go back up to the equilibrium level when the price is forced
downward: as an example 9 weeks are necessary to re-establish the long-run level in the case of a
negative shock to the German leaded retail gasoline against 12.6 in the case of a positive shock.
This is not however always the case, as again the example of Germany for the first-stage documents
(22.2 versus 15 weeks). At any rate, when we translate differences in adjustment speeds into time
periods there do not appear to exist sizeable differences between upward and downward deviations
from equilibrium. Finally, adjustment is faster in the second-stage of the chain than in the firststage.
5.3 Evidence on Exchange Rate Asymmetries
The next table considers the issue of the asymmetric transmission of shocks in exchange rates to
retail gasoline prices. Table 3 deserves a few comments. First, dollar exchange rate effects are
statistically significant in all cases. Interestingly, this significance often disappears in the singlestage case. This evidence lends support to the idea of breaking up into two stage the production and
distribution chain of gasoline on the one hand, and of allowing for exchange rate asymmetries on
the other. Finally, we see that gasoline prices are more responsive to increases in the exchange rate
than decreases, and this fact again emerges clearly in the first-stage results.
5.4. Evidence on Tests of Price Asymmetries
We have remarked above that in order to establish significant divergences between “positive” and
“negative” estimated coefficients formal statistical testing is required.
The general formulation of the asymmetric ECM, originally introduced by Granger and Lee (1989),
has been often used as the appropriate statistical framework for conventional F tests of the null
hypothesis of symmetric adjustment, both in terms of adjustment speeds towards a cointegrating
equilibrium and of short-run responses.
15
In terms of equations (4)-(6) a rejection of the null hypothesis H 0L : β ( + ) = β ( − ) implies asymmetric
adjustment to a long-run equilibrium, whereas short-run asymmetries arise when the null hypothesis
H 0S : γ ( + ) = γ ( − ) is rejected. Table 4 reports the calculated conventional F tests of H 0L and H 0S . It
immediately appears that the symmetry hypothesis is rejected only in 5 cases out of 30 and, of
these 5 cases, only 1 is a rejection at 1% significance level (3 cases at 5 % and 1 at 10%). In
addition, short-run symmetry is rejected in 2 cases out of 5, while symmetric adjustment to the
long-run is rejected in 3 cases, including the one at 10% significance level. The countries which do
not experience any asymmetry are Italy, U.K. and Germany. France and Spain show both types of
asymmetries (at single and second stage, respectively).
The overall picture which emerges from testing the symmetry hypothesis therefore runs contrary to
both the common perception and to the visual inspection of the magnitude of the estimated
coefficients made in the previous tables.
A few recent papers have questioned the reliability of conventional tests of symmetry in the above
and similar contexts. In particular, these contributions note that there is a tendency to over-reject the
null hypothesis of symmetry which can be traced to the low power of standard F statistics. Cook,
Holly, and Turner (1998) note that, for the asymmetric adjustment ECM to be valid, β (+ ) and β (− )
must be both significantly different from each other and individually significant (similar
considerations apply to the other coefficients of asymmetry). Using the Granger and Lee (1989)
data, Cook (1999) estimates an asymmetric ECM and finds that the corresponding null hypotheses
are rejected by conventional F and t tests at 5% significance level in only 8% of all the estimated
models. Cook, Holly, and Turner (1999) show that the variance of the difference between the
estimated β (+ ) and β (− ) tends to zero as the sample size increases. However, for a given sample
size, this variance is increasing in βˆ ( + ) − βˆ ( − ) and in the ratio of the variance of the independent
variable to that of the dependent variable in the ECM. Monte Carlo simulation experiments confirm
that some improvements in the power of the F statistics are made when the difference between the
adjustment speed parameters doubles, while rejection frequencies rise substantially only for large
samples (500 observations or more). Overall, rejection frequencies remain low, in the order of 17%,
for economically plausible sample sizes and magnitudes of βˆ ( + ) − βˆ ( − ) .11
11
See Cook et al. (1999), first row of Table 1, figure in column Rej , sample size T=100.
16
The findings just mentioned suggest that any straightforward interpretation of the results of Table 4
could be misleading. In order to overcome the documented unreliability of standard tests of
symmetry we have bootstrapped the F statistics for both H 0L and H 0S and have calculated the
corresponding rejection frequencies at the 5% significance level on the basis of 1,000 replications.
The results are presented in Table 5. Rejection frequencies greater than 15% are found in 17 cases
out of 30, whereas 3 are the cases with high (i.e. greater than 58%) rejection frequencies.12 If we
reinterpret the results of Table 4 in the light of these findings, the picture changes dramatically. In
particular, each country is now more likely to be characterized by both long-run and short-run
asymmetries. Moreover, in Italy, Spain and U.K. asymmetries arise in the second stage, whereas in
France and Germany they appear mainly at first and single stage.
Generally speaking, we find that in (almost) all countries asymmetries arise in the second stage. The
straightforward interpretation of this result lies in the more competitive environment of the refining
sector with respect to the distribution sector where several different operators could act to increase
upward rigidity.
6. Conclusions
In a recent paper, Peltzman (2000) states that “economic theory suggests no pervasive tendency for
prices to respond faster to one kind of cost change than to another” (p.467). However, after an
examination of “literally hundreds of markets” (p.469), he concludes that “the person in the street is
right and we [economists] are wrong” (p.493).
This paper has re-examined the issue of presumed asymmetries in the transmission of shocks to
crude oil prices onto the retail price of gasoline. Especially in periods of volatile international
markets, this is an issue to which both public opinion (nearly all are driving cars and trucks) and
policy makers are quite sensitive. It has therefore attracted the interest of energy economists, who
have carried out several empirical investigations on gasoline markets with a special eye to the
hypothesis that prices rise faster than they fall.
Relative to the previous literature the present paper contains several elements of novelty. Firstly, it
uses updated and comparable data to carry out an international comparison of gasoline markets,
12
See Cook et al. (1999), first row of Table 1, figure in column Rej , sample size T=500.
17
unlike previous work which has invariably concentrated on individual national markets. Secondly, it
breaks up the process of transmission of oil price shocks to gasoline prices into two stages, roughly
corresponding to a first refinery stage and then to a second distribution stage. In so doing we are
able to assess possible asymmetries at either one or both stages. This is obviously relevant from a
market structure perspective. Thirdly, by a suitable choice of the dynamic regression model with
which to analyze the problem, we are able to distinguish between asymmetries arising from shortlived deviations in input prices and asymmetries characterizing the speed at which the gasoline
price, once shocked, reverts to its long-run or equilibrium level. The so-called asymmetric ECM
allows precisely to carry out this task. Fourthly, we allow for an explicit possibly asymmetric role
of the exchange rate, as crude oil price is paid for in dollars whereas gasoline sells for different
sums of national currencies.
The results of the estimated parameters generally point to widespread differences both in
adjustment speeds and short-run elasticities when input prices rise or fall. This appears to confirm
the common perception amply echoed by newspapers in periods of increasing international oil
prices of more rapid price increases relative to price reductions. This finding characterizes, albeit to
a different extent, nearly all countries and both stages of the transmission chain. When however we
turn to conventional testing, we find that the usual F tests overwhelmingly fail to reject the
symmetry hypothesis. Yet, drawing from a few contributions which have addressed this specific
aspect in related contexts, we have reasons to believe that those usual tests have low power when
samples are of limited size. We therefore bootstrap the F statistics and report rejection frequencies
of our tests. The results strongly confirm the emergence of widespread price asymmetries in the
data we have examined.
In summary, and in contrast to several previous findings, we do find that rockets and feathers
appear to dominate the price adjustment mechanism of gasoline markets in many European
countries.
18
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Bacon, R.W. (1991), “Rockets and Feathers: The Asymmetric Speed of Adjustment of U.K. Retail
Gasoline Prices To Cost Changes”, Energy Economics, July, 211-218.
Balke, N.S., S.P.A. Brown, and M.K. Yücel (1998), “Crude Oil and Gasoline Prices: An
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Cook, S., S. Holly, and P. Turner (1998), “DHSY Revisited: the Role of Asymmetries”, Applied
Economics, 31, 775-778.
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Granger-Lee Asymmetry”, Economics Letters, 62, 155-159.
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Smoothing Models of Inventory Investment", American Economic Review, 79, 853-64.
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Godby, R.M., A. Lintner, T. Stengos, and B. Wandschneider (2000), “Testing for Asymmetric
Pricing in the Canadian Retail Gasoline Market”, Energy Economics, 22, 349-368.
19
Granger, C.W.J. and T.H. Lee (1989), “Investigation of Production, Sales and Inventory
Relationships Using Multicointegration and Non-symmetric Error Correction Models”,
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Karrenbrock, J.D. (1991), “The Behavior of Retail Gasoline Prices: Symmetric or Not?”, Federal
Reserve Bank of St. Louis Economic Review, 73, 19-29.
Kirchgässner, G. and K. Kübler (1992), “Symmetric or Asymmetric Price Adjustments in the Oil
Market: An Empirical Analysis of the Relations between International and Domestic Prices in
the Federal Republic of Germany, 1972-89 ”, Energy Economics, 14, 171-185.
Lanza, A. (1991), “Speed of Adjustment and Market Structure: A Study of Gasoline Market in
Germany”, Oxford Institute for Energy Studies, Energy Economics Study N.14.
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Kingdom Since 1972”, Applied Economics, 23, 1535-1541.
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OPEC Review, Summer.
20
TABLE 1: Asymmetric Adjustment Speeds and Short-run Price Asymmetries
Italy
France
Spain
Germany
U.K.
First Stage: spot = f(crude, exchange rate)
-0.733**
-0.347*
-0.855**
-0.470**
Asym. adj. speed β (+ )
-0.640*
Asym. adj. speed β
-0.400
-0.498*
-0.345*
-0.579**
-0.272
Short-run asymmetry γ (+ )
0.877**
0.801**
0.839**
0.867**
0.766**
Short-run asymmetry γ
0.856**
0.923**
0.581**
1.156**
0.718**
Asym. adj. speed β
(+ )
-0.732**
Second Stage: retail = g(spot)
-0.929**
-0.937**
-1.022**
-0.885**
Asym. adj. speed β
(− )
-0.977**
-0.892**
-0.772**
-1.422**
-0.894**
Short-run asymmetry γ (+ )
0.180**
0.362**
0.216**
0.478**
0.306**
(− )
0.205**
0.281**
0.229**
0.474**
0.194**
(− )
Short-run asymmetry γ
Asym. adj. speed β
(+ )
Asym. adj. speed β
(− )
(− )
Single Stage: retail = h(crude, exchange rate)
-1.367**
-1.055**
-1.075**
-0.739**
-0.153
-1.359**
-0.678**
-1.011**
-1.127**
-0.117*
Short-run asymmetry γ
(+ )
0.196**
0.562**
0.236**
0.788**
0.435**
Short-run asymmetry γ
(− )
0.240**
0.164
0.160**
0.552**
0.237**
Notes to the table: a single (double) asterisk denotes significance at 5% (1%) level.
21
TABLE 2: Long -run Price Asymmetries
Italy
50% of gap (upward deviation)
50% of gap (downward deviation)
95% of gap (upward deviation)
95% of gap (downward deviation)
50% of gap (upward deviation)
50% of gap (downward deviation)
95% of gap (upward deviation)
95% of gap (downward deviation)
50% of gap (upward deviation)
50% of gap (downward deviation)
95% of gap (upward deviation)
95% of gap (downward deviation)
France
Spain
Germany
U.K.
4.6
7.4
20.1
32.1
First Stage: spot = f(crude, exchange rate)
4.0
8.6
3.5
6.0
8.6
5.1
17.5
37.0
15.0
25.8
37.2
22.2
6.3
10.9
27.3
47.2
4.0
3.0
17.5
13.1
Second Stage: retail = g(spot)
3.2
3.2
2.9
3.3
3.8
2.1
13.8
13.7
12.6
14.4
16.6
9.0
3.3
3.3
14.5
14.4
2.2
2.2
9.4
9.4
Single Stage: retail = h(crude, exchange rate)
2.8
2.8
4.0
4.4
2.9
2.6
12.2
11.9
17.4
18.9
12.7
11.4
19.4
25.4
83.9
109.7
Notes to the table: the figures represent the number of weeks needed to fill 50% and 95% of the gap
between current and equilibrium price levels, distinguishing between price increases and decreases. The
figures are computed using the error correction coefficients estimated in the asymmetric ECM.
22
TABLE 3: Exchange Rate Asymmetries
Italy
(+ )
Short-run asymmetry δ
(− )
Short-run asymmetry δ
France
Spain
Germany
First Stage: spot = f(crude, exchange rate)
U.K.
1.055**
1.477**
1.297**
1.494**
1.503**
0.828**
0.698*
0.825*
0.771**
0.481
Single Stage: retail = h(crude, exchange rate)
(+ )
Short-run asymmetry δ
(− )
Short-run asymmetry δ
-0.062
0.324
0.156
0.246
0.732**
0.464**
0.693**
0.143
0.405
0.071
Notes to the table: a single (double) asterisk denotes significance at 5% (1%) level.
23
TABLE 4: Computed F Tests of Asymmetric Adjustment Speeds and
Short-run Price Effects
Italy
France
Spain
Germany
U.K.
Null Hypothesis
Sym. adj. speeds
First Stage: spot = f(crude, exchange rate)
1.855
1.651
0.0001
2.058
1.076
Short-run symmetry
0.019
0.481
2.093
0.075
Sym. adj. speeds
2.193
Second Stage: retail = g(spot)
0.197
4.465**
0.014
1.169
Short-run symmetry
1.707
0.017
1.083
Sym. adj. speeds
Single Stage: retail = h(crude, exchange rate)
0.004
3.999**
0.128
2.926*
0.091
Short-run symmetry
0.439
2.240
5.900**
9.289***
0.618
2.404
1.613
2.348
Notes to the table: (i) entries are calculated F tests of the equality between estimated
coefficients associated with error correction terms (sym. adj. speeds) and price changes
(short-run symmetry); (ii) a single (double) [triple] asterisk denotes significance at 10%
(5%) [1%] level.
24
TABLE 5: Simulated F Tests of Asymmetric Adjustment Speeds and
Short-run Price Effects
Italy
France
Spain
Germany
U.K.
Null Hypothesis
Sym. adj. speeds
First Stage: spot = f(crude, exchange rate)
0.387
0.335
0.047
0.374
0.265
Short-run symmetry
0.045
0.117
0.334
0.053
Sym. adj. speeds
0.244
Second Stage: retail = g(spot)
0.069
0.425
0.063
0.177
Short-run symmetry
0.219
0.071
0.178
Sym. adj. speeds
Single Stage: retail = h(crude, exchange rate)
0.058
0.637
0.06
0.438
0.050
Short-run symmetry
0.082
0.369
0.598
0.882
0.129
0.135
0.292
0.346
Notes to the table: entries are simulated rejection frequencies, i.e. the percentage number
of times (out of 1,000 replications) the null hypothesis of symmetric adjustment speeds
(resp. short-run symmetry) is rejected by an F tests at 5% level.
25
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Kari KANGAS (xlviii): Trade Liberalisation, Changing Forest Management and Roundwood Trade in
Europe
Xueqin ZHU and Ekko VAN IERLAND (xlviii): Effects of the Enlargement of EU on Trade and the
Environment
M. Ozgur KAYALICA and Sajal LAHIRI (xlviii): Strategic Environmental Policies in the Presence of
Foreign Direct Investment
Savas ALPAY (xlviii): Can Environmental Regulations be Compatible with Higher International
Competitiveness? Some New Theoretical Insights
Roldan MURADIAN, Martin O’CONNOR, Joan MARTINEZ-ALER (xlviii): Embodied Pollution in
Trade: Estimating the “Environmental Load Displacement” of Industrialised Countries
Matthew R. AUER and Rafael REUVENY (xlviii): Foreign Aid and Direct Investment: Key Players in the
Environmental Restoration of Central and Eastern Europe
Onno J. KUIK and Frans H. OOSTERHUIS (xlviii): Lessons from the Southern Enlargement of the EU
for the Environmental Dimensions of Eastern Enlargement, in particular for Poland
Carlo CARRARO, Alessandra POME and Domenico SINISCALCO (xlix): Science vs. Profit in Research:
Lessons from the Human Genome Project
Efrem CASTELNUOVO, Michele MORETTO and Sergio VERGALLI: Global Warming, Uncertainty and
Endogenous Technical Change: Implications for Kyoto
Gian Luigi ALBANO, Fabrizio GERMANO and Stefano LOVO: On Some Collusive and Signaling
Equilibria in Ascending Auctions for Multiple Objects
Elbert DIJKGRAAF and Herman R.J. VOLLEBERGH: A Note on Testing for Environmental Kuznets
Curves with Panel Data
CLIM
64.2001
CLIM
65.2001
CLIM
66.2001
CLIM
67.2001
CLIM
68.2001
NRM
69.2001
NRM
70.2001
CLIM
SUST
71.2001
72.2001
SUST
73.2001
SUST
74.2001
VOL
75.2001
PRIV
76.2001
PRIV
77.2001
ETA
78.2001
ETA
79.2001
ETA
ETA
80.2001
81.2001
NRM
82.2001
NRM
83.2001
CLIM
CLIM
84.2001
85.2001
CLIM
CLIM
ETA
86.2001
87.2001
88.2001
ETA
89.2001
CLIM
90.2001
CLIM
SUST
91.2001
92.2001
SUST
93.2001
CLIM
CLIM
94.2001
95.2001
ETA
SUST
96.2001
97.2001
NRM
98.2001
Paolo BUONANNO, Carlo CARRARO and Marzio GALEOTTI: Endogenous Induced Technical Change
and the Costs of Kyoto
Guido CAZZAVILLAN and Ignazio MUSU (l): Transitional Dynamics and Uniqueness of the BalancedGrowth Path in a Simple Model of Endogenous Growth with an Environmental Asset
Giovanni BAIOCCHI and Salvatore DI FALCO (l): Investigating the Shape of the EKC: A Nonparametric
Approach
Marzio GALEOTTI, Alessandro LANZA and Francesco PAULI (l): Desperately Seeking (Environmental)
Kuznets: A New Look at the Evidence
Alexey VIKHLYAEV (xlviii): The Use of Trade Measures for Environmental Purposes – Globally and in
the EU Context
Gary D. LIBECAP and Zeynep K. HANSEN (li): U.S. Land Policy, Property Rights, and the Dust Bowl of
the 1930s
Lee J. ALSTON, Gary D. LIBECAP and Bernardo MUELLER (li): Land Reform Policies, The Sources of
Violent Conflict and Implications for Deforestation in the Brazilian Amazon
Claudia KEMFERT: Economy-Energy-Climate Interaction – The Model WIAGEM Paulo A.L.D. NUNES and Yohanes E. RIYANTO: Policy Instruments for Creating Markets for
Bodiversity: Certification and Ecolabeling
Paulo A.L.D. NUNES and Erik SCHOKKAERT (lii): Warm Glow and Embedding in Contingent
Valuation
Paulo A.L.D. NUNES, Jeroen C.J.M. van den BERGH and Peter NIJKAMP (lii): Ecological-Economic
Analysis and Valuation of Biodiversity
Johan EYCKMANS and Henry TULKENS (li): Simulating Coalitionally Stable Burden Sharing
Agreements for the Climate Change Problem
Axel GAUTIER and Florian HEIDER: What Do Internal Capital Markets Do? Redistribution vs.
Incentives
Bernardo BORTOLOTTI, Marcella FANTINI and Domenico SINISCALCO: Privatisation around the
World: New Evidence from Panel Data
Toke S. AIDT and Jayasri DUTTA (li): Transitional Politics. Emerging Incentive-based Instruments in
Environmental Regulation
Alberto PETRUCCI: Consumption Taxation and Endogenous Growth in a Model with New
Generations
Pierre LASSERRE and Antoine SOUBEYRAN (li): A Ricardian Model of the Tragedy of the Commons
Pierre COURTOIS, Jean Christophe PÉREAU and Tarik TAZDAÏT: An Evolutionary Approach to the
Climate Change Negotiation Game
Christophe BONTEMPS, Stéphane COUTURE and Pascal FAVARD: Is the Irrigation Water Demand
Really Convex?
Unai PASCUAL and Edward BARBIER: A Model of Optimal Labour and Soil Use with Shifting
Cultivation
Jesper JENSEN and Martin Hvidt THELLE: What are the Gains from a Multi-Gas Strategy?
Maurizio MICHELINI (liii): IPCC “Summary for Policymakers” in TAR. Do its results give a scientific
support always adequate to the urgencies of Kyoto negotiations?
Claudia KEMFERT (liii): Economic Impact Assessment of Alternative Climate Policy Strategies
Cesare DOSI and Michele MORETTO: Global Warming and Financial Umbrellas
Elena BONTEMPI, Alessandra DEL BOCA, Alessandra FRANZOSI, Marzio GALEOTTI and Paola ROTA:
Capital Heterogeneity: Does it Matter? Fundamental Q and Investment on a Panel of Italian Firms
Efrem CASTELNUOVO and Paolo SURICO: Model Uncertainty, Optimal Monetary Policy and the
Preferences of the Fed
Umberto CIORBA, Alessandro LANZA and Francesco PAULI: Kyoto Protocol and Emission Trading:
Does the US Make a Difference?
ZhongXiang ZHANG and Lucas ASSUNCAO: Domestic Climate Policies and the WTO
Anna ALBERINI, Alan KRUPNICK, Maureen CROPPER, Nathalie SIMON and Joseph COOK (lii): The
Willingness to Pay for Mortality Risk Reductions: A Comparison of the United States and Canada
Riccardo SCARPA, Guy D. GARROD and Kenneth G. WILLIS (lii): Valuing Local Public Goods with
Advanced Stated Preference Models: Traffic Calming Schemes in Northern England
Ming CHEN and Larry KARP: Environmental Indices for the Chinese Grain Sector
Larry KARP and Jiangfeng ZHANG: Controlling a Stock Pollutant with Endogenous Investment and
Asymmetric Information
Michele MORETTO and Gianpaolo ROSSINI: On the Opportunity Cost of Nontradable Stock Options
Elisabetta STRAZZERA, Margarita GENIUS, Riccardo SCARPA and George HUTCHINSON: The Effect of
Protest Votes on the Estimates of Willingness to Pay for Use Values of Recreational Sites
Frédéric BROCHIER, Carlo GIUPPONI and Alberto LONGO: Integrated Coastal Zone Management in
the Venice Area – Perspectives of Development for the Rural Island of Sant’Erasmo
NRM
99.2001
NRM
100.2001
PRIV
101.2001
CLIM
102.2001
SUST
103.2001
SUST
104.2001
SUST
105.2001
SUST
106.2001
SUST
107.2001
SUST
108.2001
SUST
SUST
109.2001
110.2001
SUST
1.2002
ETA
2.2002
WAT
3.2002
CLIM
4.2002
VOL
CLIM
5.2002
6.2002
Frédéric BROCHIER, Carlo GIUPPONI and Julie SORS: Integrated Coastal Management in the Venice
Area – Potentials of the Integrated Participatory Management Approach
Frédéric BROCHIER and Carlo GIUPPONI: Integrated Coastal Zone Management in the Venice Area –
A Methodological Framework
Enrico C. PEROTTI and Luc LAEVEN: Confidence Building in Emerging Stock Markets
Barbara BUCHNER, Carlo CARRARO and Igor CERSOSIMO: On the Consequences of the U.S.
Withdrawal from the Kyoto/Bonn Protocol
Riccardo SCARPA, Adam DRUCKER, Simon ANDERSON, Nancy FERRAES-EHUAN, Veronica GOMEZ,
Carlos R. RISOPATRON and Olga RUBIO-LEONEL: Valuing Animal Genetic Resources in Peasant
Economies: The Case of the Box Keken Creole Pig in Yucatan
R. SCARPA, P. KRISTJANSON, A. DRUCKER, M. RADENY, E.S.K. RUTO, and J.E.O. REGE: Valuing
Indigenous Cattle Breeds in Kenya: An Empirical Comparison of Stated and Revealed Preference
Value Estimates
Clemens B.A. WOLLNY: The Need to Conserve Farm Animal Genetic Resources Through CommunityBased Management in Africa: Should Policy Makers be Concerned?
J.T. KARUGIA, O.A. MWAI, R. KAITHO, Adam G. DRUCKER, C.B.A. WOLLNY and J.E.O. REGE:
Economic Analysis of Crossbreeding Programmes in Sub-Saharan Africa: A Conceptual Framework
and Kenyan Case Study
W. AYALEW, J.M. KING, E. BRUNS and B. RISCHKOWSKY: Economic Evaluation of Smallholder
Subsistence Livestock Production: Lessons from an Ethiopian Goat Development Program
Gianni CICIA, Elisabetta D’ERCOLE and Davide MARINO: Valuing Farm Animal Genetic Resources by
Means of Contingent Valuation and a Bio-Economic Model: The Case of the Pentro Horse
Clem TISDELL: Socioeconomic Causes of Loss of Animal Genetic Diversity: Analysis and Assessment
M.A. JABBAR and M.L. DIEDHOU: Does Breed Matter to Cattle Farmers and Buyers? Evidence from
West Africa
K. TANO, M.D. FAMINOW, M. KAMUANGA and B. SWALLOW: Using Conjoint Analysis to Estimate
Farmers’ Preferences for Cattle Traits in West Africa
Efrem CASTELNUOVO and Paolo SURICO: What Does Monetary Policy Reveal about Central Bank’s
Preferences?
Duncan KNOWLER and Edward BARBIER: The Economics of a “Mixed Blessing” Effect: A Case Study
of the Black Sea
Andreas LöSCHEL: Technological Change in Economic Models of Environmental Policy: A Survey
Carlo CARRARO and Carmen MARCHIORI: Stable Coalitions
Marzio GALEOTTI, Alessandro LANZA and Matteo MANERA: Rockets and Feathers Revisited: An
International Comparison on European Gasoline Markets
(xlii) This paper was presented at the International Workshop on "Climate Change and
Mediterranean Coastal Systems: Regional Scenarios and Vulnerability Assessment"
organised by the Fondazione Eni Enrico Mattei in co-operation with the Istituto Veneto di
Scienze, Lettere ed Arti, Venice, December 9-10, 1999.
(xliii)This paper was presented at the International Workshop on “Voluntary Approaches,
Competition and Competitiveness” organised by the Fondazione Eni Enrico Mattei within
the research activities of the CAVA Network, Milan, May 25-26,2000.
(xliv) This paper was presented at the International Workshop on “Green National
Accounting in Europe: Comparison of Methods and Experiences” organised by the
Fondazione Eni Enrico Mattei within the Concerted Action of Environmental Valuation in
Europe (EVE), Milan, March 4-7, 2000
(xlv) This paper was presented at the International Workshop on “New Ports and Urban
and Regional Development. The Dynamics of Sustainability” organised by the Fondazione
Eni Enrico Mattei, Venice, May 5-6, 2000.
(xlvi) This paper was presented at the Sixth Meeting of the Coalition Theory Network
organised by the Fondazione Eni Enrico Mattei and the CORE, Université Catholique de
Louvain, Louvain-la-Neuve, Belgium, January 26-27, 2001
(xlvii) This paper was presented at the RICAMARE Workshop “Socioeconomic
Assessments of Climate Change in the Mediterranean: Impact, Adaptation and Mitigation
Co-benefits”, organised by the Fondazione Eni Enrico Mattei, Milan, February 9-10, 2001
(xlviii) This paper was presented at the International Workshop “Trade and the
Environment in the Perspective of the EU Enlargement ”, organised by the Fondazione Eni
Enrico Mattei, Milan, May 17-18, 2001
(xlix) This paper was presented at the International Conference “Knowledge as an
Economic Good”, organised by Fondazione Eni Enrico Mattei and The Beijer International
Institute of Environmental Economics, Palermo, April 20-21, 2001
(l) This paper was presented at the Workshop “Growth, Environmental Policies and +
Sustainability” organised by the Fondazione Eni Enrico Mattei, Venice, June 1, 2001
(li) This paper was presented at the Fourth Toulouse Conference on Environment and
Resource Economics on “Property Rights, Institutions and Management of Environmental
and Natural Resources”, organised by Fondazione Eni Enrico Mattei, IDEI and INRA and
sponsored by MATE, Toulouse, May 3-4, 2001
(lii) This paper was presented at the International Conference on “Economic Valuation of
Environmental Goods”, organised by Fondazione Eni Enrico Mattei in cooperation with
CORILA, Venice, May 11, 2001
(liii) This paper was circulated at the International Conference on “Climate Policy – Do We
Need a New Approach?”, jointly organised by Fondazione Eni Enrico Mattei, Stanford
University and Venice International University, Isola di San Servolo, Venice, September 6-8,
2001
2001 SERIES
MGMT
Corporate Sustainable Management (Editor: Andrea Marsanich)
CLIM
Climate Change Modelling and Policy (Editor: Marzio Galeotti )
PRIV
Privatisation, Antitrust, Regulation (Editor: Bernardo Bortolotti)
KNOW
Knowledge, Technology, Human Capital (Editor: Dino Pinelli)
NRM
Natural Resources Management (Editor: Carlo Giupponi)
SUST
Sustainability Indicators and Environmental Evaluation
(Editor: Marialuisa Tamborra)
VOL
Voluntary and International Agreements (Editor: Carlo Carraro)
ETA
Economic Theory and Applications (Editor: Carlo Carraro)
2002 SERIES
MGMT
Corporate Sustainable Management (Editor: Andrea Marsanich)
CLIM
Climate Change Modelling and Policy (Editor: Marzio Galeotti )
PRIV
Privatisation, Antitrust, Regulation (Editor: Bernardo Bortolotti)
KNOW
Knowledge, Technology, Human Capital (Editor: Dino Pinelli)
NRM
Natural Resources Management (Editor: Carlo Giupponi)
SUST
Sustainability Indicators and Environmental Evaluation
(Editor: Marialuisa Tamborra)
VOL
Voluntary and International Agreements (Editor: Carlo Carraro)
ETA
Economic Theory and Applications (Editor: Carlo Carraro)
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