Price Regulations and Price Adjustment Dynamics

摘要

This paper investigates fuel price regulations implemented in Austria prohibiting retailers from raisingtheir prices more than once per day. We analyse price transmission dynamics over three subsamplesand find evidence for asymmetric adjustment in the post-regulation period. Considering the combinedeffect of input price changes reveals that gasoline now passes through input price changes faster in thepost-regulation period. We do not obtain the same finding for diesel, where only input price increasesare transmitted significantly faster. We conclude that the Austrian fuel price regulation seems to havebeen a partial success in terms of efficiency in price transmission.