Competition in a wholesale fuel market—the impact of the structural changes caused by COVID-19

Abstract

Liquid fuels obtained in refining crude oil are one of the most important energies in economic activity. The domestic wholesale market for liquid fuels is of decisive importance for price formation in the national economy. The noncompetitive behavior of the market players at this level of the distribution chain can significantly affect all downstream price levels and the producer–con-sumer surplus balance. Therefore, the competitiveness of this market should be screened and assessed regularly, especially when significant external factors change. This article attempts to evalu-ate the impact of structural changes on the global market of crude oil and energy products after the outbreak of the COVID-19 pandemic on the competitiveness of the wholesale fuel market in Poland. Using asymmetry of the reaction of product prices to changes in the prices of inputs as a marker of noncompetitive behavior and the NARDL model as a test specification, the price paths of market players before and after the occurrence of structural changes in the inputs’ processes were exam-ined. Significant changes in the competitive behavior of players were revealed after the occurrence of structural changes at the beginning of the pandemic period in the year 2020. These changes may indicate enhanced competition and mitigation of potential market power abuse.