Price dynamics in European petroleum markets

This paper analyses horizontal and vertical price dynamics in the EU petroleum markets. The results indicate that the cross-country price differentials have significant impact on the local price adjustments. We investigate the cross-national price spill-overs and find that the extent of the welfare transfer due to asymmetric price transmission, when analysed in a cross-country setting, is less pronounced than claimed in previous contributions in this area. We also find empirical evidence, although indirect, for the politically charged concept of “fuel tourism”, using a pan-European cross-product time series dataset.