Аuthors:

Sergey I. Fedorov, Junior Research Fellow. Center for Research in Competition and Economic Regulation (RANEPA), Moscow, Russia; Postgraduate, Junior Lecturer of Faculty of Economics. Lomonosov Moscow State University

Abstract:

Regulating retail fuel prices, which are getting particularly volatile, is an urgent issue amid the shock period that the global energy industry is facing today. Price volatility, however, is a factor in coordinating consumers’ and fuel producers’ plans. Economic theory fails to explain why in some countries, during a shock period, governments tend to regulate retail prices, while in others they develop market pricing mechanisms in the fuel market. The article reveals the influence of Douglass North’s social orders on the tendency of governments to establish a price regulation mechanism in the retail fuel market. New institutional economics constitutes the theoretical framework of the study. Among the research methods are case analysis, comparative crosscountry analysis, and statistical analysis. The empirical evidence comes from regulatory legal acts, US and Russian state statistics on fuel prices for 2019–2023, and materials from the GlobalPetrolPrices project. The research results revealed differences in uncertainty assessments by the governments of countries with different social orders: for regulators in open access social orders, industry shock is the reason of finding a new way to adapt to market conditions; for regulators in limited access social orders, it is the risk of destabilization of the social order. Our findings help to outline the institutional rationale behind the implementation of industry-specific policies.

Keywords:

price regulation; economic competition; transaction management mechanisms; social orders; retail prices; fuel.

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