Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

Facing record-high level of oil prices and increasing volatility in gasoline market, Korean government has introduced a new type of discount gas stations so-called “Thrifty gas stations”. By diversifying supply channels and consumer options, the Korean government aimed to boost the competitions among gas stations thus mitigating the burden of households’ utility bills. The purpose of this study is to analyse the impact of the introduction of thrifty stations on gasoline prices. This is more subtle task than one might expect since the gas stations which chose to convert into thrifty stations may have been selling their products at lower prices than average gas stations even before the conversion. Thus simple comparisons between thrifty stations and the others may not provide us an appropriate ex pose impact assessment. In order to minimize such problems and control the group-specific effects over time, here we use parametric and non-parametric difference-in-differences approaches. Our estimation results indicate that the price of a gas station decreases approximately by 20 KRW after its conversion into a thrifty station and a station near (within 3km radius) to a thrifty station sells its product at a price 3~7 KRW lower on average.