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Taxation and the asymmetric adjustment of selected retail energy prices in the UK

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JournalEconomics Letters
DateE-pub ahead of print - 21 Sep 2013
DatePublished (current) - Dec 2013
Issue number3
Volume121
Number of pages6
Pages (from-to)411-416
Early online date21/09/13
Original languageEnglish

Abstract

This paper investigates the adjustment of the prices of four key petroleum products in the UK following changes in the price of crude oil. We find significant evidence that the pre-tax prices of diesel, kerosene and gas oil adjust more rapidly in an upward than a downward direction but that the pre-tax price of unleaded petrol adjusts symmetrically. However, these patterns are obscured at the pump once one accounts for fuel duty and value added tax, raising the possibility that firms can use the tax system to conceal rent seeking behaviour.

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Copyright © 2013 Elsevier B.V. This is an author produced version of the paper published in Economics Letters. Uploaded in accordance with the publisher's self-archiving policy.

    Research areas

  • Nonlinear ARDL (NARDL), Asymmetric Gasoline Price Adjustment, Rockets and Feathers Hypothesis

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