On May 2009, the Korean government mandated disclosure of gasoline
product cost information at the oil company level to induce oil companies to
competitively reduce the wholesale prices of the gasoline products.
Theoretically, the disclosure effect of the wholesale price could be either
positive (averaged to the lower level) or negative (averaged to the upper
level). This study investigates the disclosure effect of the wholesale price,
using weekly wholesale price at the oil company level. The results from
ranking analysis reveal that the ranking volatilities among oil companies
increased after the cost information disclosure. Furthermore, the results from
the various graphs show that price dispersion of the wholesale prices (both
gasoline and diesel) decreased, However, the wholesale pricing regression
results conclude that the wholesale prices were converged to the upper level,
contrary to the expectations of the Korean government.