This paper investigates whether retail gasoline prices respond asymmetrically to changes in crude oil prices. The authors find that retail gasoline prices react more quickly to increases in crude oil prices than to decreases. Specifically, nearly all of the response to a crude oil price increase appears within 4 weeks, while decreases are passed along gradually over 8 weeks. The asymmetry could be due to market power of producers or distributors or inventory adjustment costs. By analyzing price transmission at different points in the distribution chain, the authors explore these theories. They find that some asymmetry occurs at the competitive spot market level, possibly reflecting inventory costs, but wholesale gasoline prices exhibit no asymmetry, indicating that refiners are not the source of the asymmetry. The most significant asymmetry is observed in the response of retail prices to wholesale price changes, suggesting that short-run market power among retail gasoline sellers is a major factor. The paper also discusses the production and distribution process of gasoline, the econometric issues in estimating price adjustments, and the potential explanations for the asymmetric responses, including sticky prices and imperfect competition.This paper investigates whether retail gasoline prices respond asymmetrically to changes in crude oil prices. The authors find that retail gasoline prices react more quickly to increases in crude oil prices than to decreases. Specifically, nearly all of the response to a crude oil price increase appears within 4 weeks, while decreases are passed along gradually over 8 weeks. The asymmetry could be due to market power of producers or distributors or inventory adjustment costs. By analyzing price transmission at different points in the distribution chain, the authors explore these theories. They find that some asymmetry occurs at the competitive spot market level, possibly reflecting inventory costs, but wholesale gasoline prices exhibit no asymmetry, indicating that refiners are not the source of the asymmetry. The most significant asymmetry is observed in the response of retail prices to wholesale price changes, suggesting that short-run market power among retail gasoline sellers is a major factor. The paper also discusses the production and distribution process of gasoline, the econometric issues in estimating price adjustments, and the potential explanations for the asymmetric responses, including sticky prices and imperfect competition.