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This paper models and estimates the gasoline price dispersion across time and space by using a unique data set at the gas-station level within the U.S.. Nationwide effects (measured by time fixed effects or crude oil prices) explain up to about 51% of the gasoline price dispersion across stations. Refinery-specific costs, which have been ignored in the literature due to using local data sets within the U.S., contribute up to another 33% to the price dispersion. While state taxes explain about 12% of the price dispersion, spatial factors such as local agglomeration externalities, land prices, distribution costs of gasoline explain up to about 4%. The contribution of brand-specific factors is relatively minor.
Yilmazkuday, Demet and Yilmazkuday, Hakan, "Understanding Gasoline Price Dispersion" (2016). Economics Research Working Paper Series. 109.
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