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Do Gasoline Mergers Affect Consumer Prices? The Marathon Ashland Petroleum and Ultramar Diamond Shamrock Transaction

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  • John Simpson
  • Christopher Taylor
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    Abstract

    In 1999, Marathon Ashland Petroleum (MAP) acquired the Michigan assets of Ultramar Diamond Shamrock (UDS), which increased MAP's share of terminal storage in Michigan from about 16 percent to about 25 percent and increased the share of gasoline stations bearing a MAP brand from about 16 percent to about 24 percent. In this paper, we examine whether this acquisition affected the retail price of gasoline. We use a difference-in-differences model to compare price movements in six Michigan cities affected by the acquisition with price movements in two nearby cities unaffected by the acquisition. Using this model, we find no evidence that this acquisition led to higher prices for consumers. .

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    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/520004
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

    Volume (Year): 51 (2008)
    Issue (Month): 1 (02)
    Pages: 135-152

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    Handle: RePEc:ucp:jlawec:v:51:y:2008:i:1:p:135-152

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    Web page: http://www.journals.uchicago.edu/JLE/

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    Cited by:
    1. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer, vol. 40(2), pages 87-108, March.
    2. Duarte Brito & Pedro Pereira & Joaquim Ramalho, 2013. "Mergers, Coordinated Effects and Efficiency in the Portuguese Non-Life Insurance Industry," CEFAGE-UE Working Papers 2013_18, University of Evora, CEFAGE-UE (Portugal).
    3. Pennerstorfer, Dieter & Weiss, Christoph, 2013. "Spatial clustering and market power: Evidence from the retail gasoline market," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 661-675.
    4. Orley C. Ashenfelter & Daniel Hosken & Matthew C. Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," NBER Working Papers 19939, National Bureau of Economic Research, Inc.
    5. Zimmerman, Paul R., 2009. "The competitive impact of hypermarket retailers on gasoline prices," MPRA Paper 20248, University Library of Munich, Germany.
    6. Christopher T. Taylor & Nicholas M. Kreisle & Paul R. Zimmerman, 2010. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Comment," American Economic Review, American Economic Association, vol. 100(3), pages 1269-76, June.
    7. Emilie Dargaud & Carlo Reggiani, 2012. "On the Price Effects of Horizontal Mergers : A Theoretical Interpretation," Working Papers halshs-00717467, HAL.
    8. Orley C. Ashenfelter & Daniel Hosken & Matthew C. Weinberg, 2013. "Efficiencies Brewed: Pricing and Consolidation in the U.S. Beer Industry," NBER Working Papers 19353, National Bureau of Economic Research, Inc.
    9. Orley C. Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," NBER Working Papers 14798, National Bureau of Economic Research, Inc.
    10. Adriana Nikolic & Christoph Weiss, 2014. "Spatial interactions in location decisions: Empirical evidence from a Bayesian spatial probit model," Department of Economics Working Papers wuwp177, Vienna University of Economics, Department of Economics.

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