Electronic Thesis and Dissertation Repository

Degree

Doctor of Philosophy

Program

Applied Mathematics

Supervisor

Davison, Matt

2nd Supervisor

Odegaard, Fredrik

Co-Supervisor

Abstract

The study of the retail gasoline market is of great interest in financial economics, since it allows many theories about price formation, oligopolistic markets, and consumer search to be tested. In addition, the risk management of gasoline prices is an important instance of the management of any consumable commodity cost. For the retailer, the tool of dynamic pricing may be found to be useful.

This thesis contributes to the study of retail gasoline markets in three main ways, each in its own paper. The first paper tests various economic models to confirm earlier results about pricing behavior in retail gasoline markets and the setting of optimal pricing strategies. The second paper presents optimal refueling strategies, analysis of optimal swap contracts. It also proposes and analyzes a price guarantee ”gasoline option” based on loyalty programs and financial swap structures. The final paper presents optimal refueling strategies using empirical data, and compares the value obtained using a simulated approach with the value using an empirical approach.

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