ARE THE PRICES OF THE DRIVING FUEL IN THE SLOVAK ECONOMY MAKING ASYMMETRIC?

Are the prices of the driving fuel in the Slovak economy making asymmetrically? Will in the Slovak economy the same negative and positive changes of the oil price cause the different negative and positive changes of the driving fuel prices? Yes it will. The price maker reacts more strictly, when the oil price increases and, on the other hand, he is more benevolent when the oil price falls. His preferences are asymmetric. The source of the asymmetric price making is a conflict between the society that requires respectable fuel prices and the price-maker that requires making use of his dominant position by setting optimal prices. As we show, the theory explains the structure of the driving fuel price-making. To verify our statements we form an asymmetric cost function of the driving fuel price maker and derive his reaction function. The coefficients of the function are estimated by the generalised method of moments and by the two stage least square method.