Effectiveness and effects of attempts to regulate the UK petrol industry

This paper evaluates the impact that investigation and regulation of the UK petrol industry has had on the profitability of the companies. Using a gross margin for petrol, we estimate a series of variable parameter autoregressive processes. The results demonstrate that the 1979 Monopolies and Mergers Commission investigation into the industry, caused a long-term decline in profit margins in the industry, despite the fact that no recommendations or undertakings were made. This cannot, however, be said for subsequent investigations. Q 2000 Elsevier Science B.V. All rights reserved. JEL classifications: L10; L51