Public Transport Fares and Domestic Fuel Prices: Are They Cointegrated? The Case of Fiji

In Fiji, the transportation sector is heavily price regulated, through price controls on bus, minibus, and taxi fares, and through price controls on imported fossil fuel, which the transportation sector is fully reliant on. This double price control constitutes a government policy aimed at ensuring transportation affordability. Amid this disposition, we check to see whether transport prices align with fuel prices in the long run. We use comprehensive price control orders authorised by the Fijian Competition and Consumer Commission to test the long run equilibrium relationship between prices of transport and fuel.