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This study investigated the role of price elasticity in the asymmetric adjustment of global retail energy prices and
in the rent-seeking behavior of retail energy firms. Overall, 58 nonlinear ARDL models were estimated for the
period 2004:M12 – 2016M8 using data for gasoline, automotive diesel, domestic heating oil, industrial fuel oil
and crude oil markets. The results indicate that global retail energy markets are still pervasively fraught with the
problems of rockets and feathers effect and the likelihood of retailers manipulating the tax system to hide rent-
seeking behaviors. The results also indicate that there is more likelihood of rent-seeking activities in the markets
for road fuels whose demand is relatively more price-inelastic than in the markets for non-road fuels whose
demand is relatively more price-elastic, thereby suggesting that differences in market structure could offer a
possible explanation for rent-seeking and asymmetric price adjustment in global retail energy markets. These
results have far-reaching antitrust and consumer welfare implications, which require regulators and policy
makers to interminably monitor the global retail energy markets, especially during periods of economic crisis like
the ongoing COVID-19 pandemic, in order to safeguard the overall social welfare.
