Work detail

The Importance of Non-Price Competitiveness: Oil Downstream Sector in Europe

Author: Mgr. Ondřej Sláma
Year: 2017 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 71
Awards and prizes:
Abstract: This thesis investigates the role of price and non-price competitiveness factors using a relative
export price index, introduced by Benkovskis and Wörz (2016), that is adjusted for changes in
quality and taste. First, we replicate their model employing an updated dataset, confirming previous
results. Then, the framework is used to study the recent developments in the Europe’s oil product
market. Given the saturation of the market, decreasing demand, and converging prices, importance
of non-price competitiveness factors, such as quality, increases. The results suggest that the
problems of the underinvested oil downstream industry in Northwestern European producers are
caused not only by decreasing aggregate demand, high costs, and low margins, but by non-price
competitiveness factors as well. We find profound improvements in product quality in CEE
countries, following substantial investments into the sector and market consolidation. Both regions
are at risk of rising imports of high-quality products from the Middle East, Russia and USA. This
thesis provides a comprehensive picture of price and non-price competitiveness developments of
all players in the highly competitive European oil downstream market.


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