FoolWatch - Further Discussion of Econometric Analysis Undertaken By ACCC

Harding, Don (2008): FoolWatch - Further Discussion of Econometric Analysis Undertaken By ACCC.

Abstract

Using data supplied by InformedSources I find additional flaws in the ACCC analysis of FuelWatch. First, the drop in petrol prices that is so visually convincing in the ACCC chart S1 is in fact an artifact of the method of data construction and can be attributed primarily to increases in prices in Adelaide and Melbourne --- events that had nothing to do with Western Australia or FuelWatch. Second, redoing the analysis using Sydney as the point of reference and adding prices in other cities as explanatory variables lead to results that contradict ACCC findings. First I find that the two best models that I estimate yield the conclusion that Fuelwatch either increased petrol prices in Western Australia by a small amount or had no effect. Third, I find that the entry of Woolworths and Coles into the Western Australian market had the effect of reducing unleaded petrol prices Perth by about 2.67 per cent relative to Sydney.

• Item Type: MPRA Paper
• Language: English
• Keywords: Petrol Pricing; Fuelwatch; Econometrics and public policy; Evidence based policy
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D18 - Consumer Protection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

References

ACCC 2007, Petrol Prices and Australian Consumers: Report of the ACCC inquiry into the price of unleaded petrol, 18 December 2007.

ACCC 2008, Petrol---Further Econometric Analysis Undertaken by ACCC, 29 May 2008.

Hannan E.J., and B.G. Quinn (1979), "The Determination of the Order of an Autoregression," Journal of the Royal Statistical Society, B41, 190-195.

Harding D., (2008)."FoolWatch: A Case study of econometric analysis and `evidence-based-policy making' in the Australian Government", Mimeo, Latrobe University.