The Impact of Upstream Mergers on Retail Gasoline Markets
نویسنده
چکیده
In recent years, a number of mergers have occurred in the petroleum industry involving upstream firms that are imperfectly integrated into retail markets. In order to empirically evaluate the competitive effects of such mergers, this paper proposes a structural model of supply and demand that reflects divisions between upstream producers and downstream retailers. Neither downstream costs including wholesale prices nor upstream costs are observed. A standard differentiated products oligopoly model of retail competition provides an expression for downstream costs including wholesale prices as the difference between observed prices and downstream mark-ups. The downstream model is combined with a model of upstream competition that relates wholesale prices and upstream costs to upstream mark-ups. The supply model is estimated along with a demand model reflecting downstream product differentiation using data from the Hawaiian islands in the early 1990s. JEL Classification: L13, L22, L49, L91
منابع مشابه
WZB Conference on Markets and Political Economy
We examine coordinated effects of mergers in the Swedish retail market for gasoline during the period 1986-2002. Despite significant changes in market concentration and many factors conducive to coordination, the empirical analysis shows that the level of coordination is low. In addition, statistical tests reject the hypothesis that mergers and acquisitions result in ”coordinated effects”. In p...
متن کاملMultimarket Contact in Vertically Related Markets
We analyze collusion in two comparable market structures. In the first market structure only one firm is vertically integrated; there is one more independent firm in the upstream industry and another independent firm in the downstream industry. In the second market structure, there are only two vertically integrated firms that can trade among themselves in the intermediate good market. The seco...
متن کاملPWP-075 Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California
This study examines how much, if any, of the differences in retail gasoline prices between markets is attributable to differences in the composition of vertical contract types at gasoline stations in each market. The purchase of the independent retail gasoline chain, Thrifty, by ARCO provides a unique opportunity to examine the effects of changes in different vertical contract types on local re...
متن کاملVertical Relationships and Competition in Retail Gasoline Markets Empirical Evidence from Contract Changes in Southern California
This study examines how much, if any, of the differences in retail gasoline prices between markets is attributable to differences in the composition of vertical contract types at gasoline stations in each market. The purchase of the independent retail gasoline chain, Thrifty, by ARCO provides a unique opportunity to examine the effects of changes in different vertical contract types on local re...
متن کاملThe Speed of Gasoline Price Response in Markets with and without Edgeworth Cycles
Retail gasoline prices are known to respond fairly slowly to wholesale price changes. This does not appear to be true for markets with Edgeworth price cycles. Recently, many retail gasoline markets in the midwestern U.S. and other countries have been shown to exhibit price cycles, in which competition generates rapid cyclical retail price movements. We show that cost changes in cycling markets ...
متن کامل