Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23366
Authors: 
Dreher, Axel
Krieger, Tim
Year of Publication: 
2004
Series/Report no.: 
Arbeitspapiere der Nordakademie 2004-04
Abstract: 
The paper presents univariate and panel unit root tests for gasoline and oil price convergence over the last decade. We test for the absolute versus relative version of the LOOP and estimate the speed of convergence as well as its development over time. Our results show that the absolute version of the LOOP cannot be supported. Constant price differences between countries remain, caused mainly by existing tax differences. The relative version of the LOOP is strongly supported by the data. The speed of convergence increased over time, but differs for gross and net-of-tax prices. We can show that national tax policy by EU member states is not (yet) threatened by arbitrage due to cross-border shopping.
Subjects: 
price convergence
law of one price
gasoline
international taxation
European integration
panel unit roots
JEL: 
H7
C2
Q48
F15
Document Type: 
Working Paper

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