Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240704 
Year of Publication: 
2020
Series/Report no.: 
Working Papers No. 2020-15
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We document the following stylized facts for the Mexican retail market for gasoline using data for 2018-2019: (1) consumer prices adjust slower than wholesale prices; (2) more competition, in the form of a higher density of stations, implies lower markups and lower prices; and (3) more competition implies faster pass-through. However, we find geographical differences in the speed of pass-through that cannot be explained by differences in station density. We conjecture that coordination on high prices could be offsetting competitive pressure in some locations. We build a classifier that separates municipalities into two categories depending on whether the relative price concentration is on "high" prices or "low" prices. In the first type of municipalities, the price concentration is correlated positively with the price level and negatively with pass-through. For concentration in "low" prices the signs of the correlations are reversed.
Subjects: 
Gasoline
Pass-through
Geographic Competition
Price Coordination
JEL: 
L4
L5
L13
D4
H25
Document Type: 
Working Paper
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