Wholesale fuel price adjustment in Poland: examination of competitive performance

Abstract

Motivation: Import parity pricing, potentially provoking parallel pricing, and asymmetric price transmission are both considered as the fac-tors that can distort competitiveness and foster collusive behavior on the fuel markets. Aim: The study encompass an analysis of usual ‘rocket and feathers’ reactions in response to common drivers of the gasoline wholesale price and comparative analysis of individual players’ pricing paths in order to examine competitive performance of the market. To account for an im-plied IPP pricing mechanism, a set of common wholesale price determi-nants was expanded. Results: We revealed a significant short-run asymme-tries in a transmission of all downstream price determinants and shown that the foreign exchange rate is a main driver underlying a positive asymmetry in the wholesale prices’ paths. We compared dynamic price adjustment paths for the major players and revealed the common patterns. That suggest a strong possibility of parallel pricing.