ASYMMETRIC RESPONSE OF RETAIL DIESEL AND GASOLINE PRICES TO CHANGES IN WHOLESALE AND MARKET PRICES IN POLAND IN 2007–2024
DOI:
https://doi.org/10.12775/TIS.2025.011Keywords
Asymmetric price transmission, Wholesale and retail prices, Rocket and feather effect, Fuel pricing dynamics, Cointegration analysis, Error correction modelAbstract
Purpose: The aim of this article is to examine whether there were asymmetric price transmissions between the market prices of crude oil and wholesale prices, as well as between wholesale and retail fuel prices in Poland between 2007 and 2024.
Methodology/approach: Cointegration analysis was conducted to determine the presence of a stable, long-term relationship between market, wholesale, and retail prices of liquid fuels (diesel and gasoline) in Poland. Additionally, asymmetric error correction models were estimated to assess whether retail and wholesale prices respond differently to increases and decreases in wholesale and market prices.
Findings: The analysis confirms the presence of asymmetric price transmission from wholesale to retail fuel prices in Poland. Retail prices exhibit a stronger response to wholesale price increases than to decreases. Specifically, retail diesel prices rise 2.91 times more when wholesale prices increase than they fall when wholesale prices decline, while for gasoline, this effect is even stronger (4.42 times). Notably, no asymmetry is observed in the transmission from crude oil to wholesale prices. These findings suggest that price rigidity in the retail market contributes to slower price reductions, potentially due to market power or demand inelasticity.
Originality/value: This study contributes to the literature by providing new insights into asymmetric price transmission in Poland’s liquid fuels market, which is characterized by a dominant state-owned enterprise and strong political influences. By analysing an extended time series (2007–2024), it confirms the presence of asymmetry in retail price adjustments to wholesale price changes while finding no such effect between market and wholesale prices, refining prior mixed evidence.
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