Asymmetries in the German diesel retail market

Economists often analyze asymmetric cost pass-through between retail fuel prices and oil prices (‘Rockets and Feathers’) as a proxy for market power. Such asymmetries have been analyzed for different countries and time periods. However, few studies have been conducted for the German market. Furthermore, no study has differentiated between company types in this context. In this paper, we analyze market behavior in the German diesel market. We compare the pricing strategies of independent petrol stations with the general diesel market. Independent petrol stations have no connection with popular fuel brands and therefore might decrease market power of dominating brand stations. We use an error correction model for the period from 2011 to 2012 to evaluate the specific market behavior. We conclude that asymmetric pricing behavior is given for independent petrol stations as well as for the whole German market.