This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Estimating Vertical Foreclosure in U.S. Gasoline Supply

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Zava Aydemir
Stefan Buehler () (Socioeconomic Institute, University of Zurich)

Additional information is available for the following registered author(s):

Abstract

We examine the competitive effects of the vertical integration of gasoline refineries and retailers in the U.S. Adapting the first-order condition approach of static oligopoly games to the analysis of vertically related oligopolies, we develop a novel framework for directly evaluating the strategic foreclosure effect and the effciency benefits associated with vertical integration. Applying this framework, we find significant evidence for both vertical foreclosure and effciency benefits. The foreclosure effect dominates the effciency benefits for more than half of the refining firms in the sample. Vertical foreclosure is found to increase the wholesale price of refined gasoline by 0.2 to 0.6 cents per gallon.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.soi.uzh.ch/research/wp/2002/wp0212.pdf
File Format: application/pdf
File Function: First version, 2002
Download Restriction: no

Publisher Info
Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0212.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 38 pages
Date of creation: Nov 2002
Date of revision:
Handle: RePEc:soz:wpaper:0212

Contact details of provider:
Postal: Bl�mlisalpstrasse 10, CH-8006 Z�rich
Phone: +41-1-634 22 05
Fax: +41-1-634 49 07
Email:
Web page: http://www.soi.uzh.ch/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Harry Telser).

Related research
Keywords: vertical integration separation foreclosure market conduct petroleum industry

Other versions of this item:

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other
L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Chen, Yongmin, 2001. "On Vertical Mergers and Their Competitive Effects," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 667-85, Winter.
    Other versions:
  2. Daniel P. O'Brien & Greg Shaffer, 1992. "Vertical Control with Bilateral Contracts," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 299-308, Autumn. [Downloadable!] (restricted)
  3. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-71, May. [Downloadable!] (restricted)
  4. Richard Gilbert & Justine Hastings, 2001. "Vertical Integration in Gasoline Supply: An Empirical Test of Raising Rivals' Costs," Department of Economics, Working Paper Series 1011, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
    Other versions:
  5. Severin Borenstein & Andrea Shepard, 2002. "Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 116-139, Spring.
    Other versions:
  6. Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  7. Rubinfeld, Daniel L & Singer, Hal J, 2001. "Vertical Foreclosure in Broadband Access?," Journal of Industrial Economics, Blackwell Publishing, vol. 49(3), pages 299-318, September. [Downloadable!] (restricted)
  8. Asher Blass & Dennis W. Carlton, 1999. "The Choice of Organizational Form in Gasoline Retailing and The Costs of Laws Limiting that Choice," NBER Working Papers 7435, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Waterman, David & Weiss, Andrew A., 1996. "The effects of vertical integration between cable television systems and pay cable networks," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 357-395. [Downloadable!] (restricted)
  10. Shepard, Andrea, 1991. "Price Discrimination and Retail Configuration," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 30-53, February. [Downloadable!] (restricted)
  11. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July. [Downloadable!] (restricted)
  12. McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-30, March. [Downloadable!] (restricted)
  13. Martin, Stephen & Normann, Hans-Theo & Snyder, Christopher M, 2001. "Vertical Foreclosure in Experimental Markets," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 466-96, Autumn.
  14. Jeffrey Church & Neil Gandal, 2000. "Systems Competition, Vertical Merger, and Foreclosure," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 9(1), pages 25-51, 03. [Downloadable!] (restricted)
    Other versions:
  15. David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer. [Downloadable!] (restricted)
  16. Jay Pil Choi & Sang-Seung Yi, 2000. "Vertical Foreclosure with the Choice of Input Specifications," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 717-743, Winter.
  17. Chen, Ming-Yuan, 2002. "Survival duration of plants: Evidence from the US petroleum refining industry," International Journal of Industrial Organization, Elsevier, vol. 20(4), pages 517-555, April. [Downloadable!] (restricted)
  18. Bolton, Patrick & Whinston, Michael D, 1993. "Incomplete Contracts, Vertical Integration, and Supply Assurance," Review of Economic Studies, Blackwell Publishing, vol. 60(1), pages 121-48, January. [Downloadable!] (restricted)
  19. Newey, Whitney K., 1984. "A method of moments interpretation of sequential estimators," Economics Letters, Elsevier, vol. 14(2-3), pages 201-206. [Downloadable!] (restricted)
  20. Patrick Rey & Joseph Stiglitz, 1995. "The Role of Exclusive Territories in Producers' Competition," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 431-451, Autumn. [Downloadable!] (restricted)
    Other versions:
  21. McBride, Mark E, 1983. "Spatial Competition and Vertical Integration: Cement and Concrete Revisited," American Economic Review, American Economic Association, vol. 73(5), pages 1011-22, December. [Downloadable!] (restricted)
  22. Ordover, Janusz A & Saloner, Garth & Salop, Steven C, 1990. "Equilibrium Vertical Foreclosure," American Economic Review, American Economic Association, vol. 80(1), pages 127-42, March. [Downloadable!] (restricted)
  23. Severin Borenstein, 1991. "Selling Costs and Switching Costs: Explaining Retail Gasoline Margins," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 354-369, Autumn. [Downloadable!] (restricted)
  24. Severin Boreinstein & Andrea Shepard, 1996. "Dynamic Pricing in Retail Gasoline Markets," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 429-451, Autumn. [Downloadable!] (restricted)
    Other versions:
  25. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November. [Downloadable!] (restricted)
  26. Slade, Margaret E, 1998. "Strategic Motives for Vertical Separation: Evidence from Retail Gasoline Markets," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(1), pages 84-113, April.
  27. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Blackwell Publishing, vol. 36(1), pages 19-34, September. [Downloadable!] (restricted)
  28. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June. [Downloadable!] (restricted)
  29. Rosengren, Eric S & Meehan, James W, Jr, 1994. "Empirical Evidence on Vertical Foreclosure," Economic Inquiry, Oxford University Press, vol. 32(2), pages 303-17, April.
    Other versions:
  30. Shepard, Andrea, 1990. "Pricing Behavior and Vertical Contracts in Retail Markets," American Economic Review, American Economic Association, vol. 80(2), pages 427-31, May. [Downloadable!] (restricted)
  31. Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May. [Downloadable!] (restricted)
  32. Allen, Bruce T, 1971. "Vertical Integration and Market Foreclosure: The Case of Cement and Concrete," Journal of Law & Economics, University of Chicago Press, vol. 14(1), pages 251-74, April.
  33. Riordan, Michael H, 1998. "Anticompetitive Vertical Integration by a Dominant Firm," American Economic Review, American Economic Association, vol. 88(5), pages 1232-48, December. [Downloadable!] (restricted)
    Other versions:
  34. Borenstein, Severin & Cameron, A Colin & Gilbert, Richard, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 305-39, February.
    Other versions:
  35. Richard Gilbert and Justine Hastings., 2001. "Vertical Integration in Gasoline Supply: An Empirical Test of Raising Rivals' Costs," Economics Working Papers E01-302Rev, University of California at Berkeley. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stefan Buehler & Justus Haucap, 2003. "Strategic Outsourcing Revisited," Working Papers 0305, University of Zurich, Socioeconomic Institute. [Downloadable!]
    Other versions:
  2. Stefan Buehler & Justus Haucap, 2003. "Mobile Number Portability," Working Papers 0303, University of Zurich, Socioeconomic Institute, revised Jul 2003. [Downloadable!]
    Other versions:
  3. Andreas Polk & Armin Schmutzler, 2003. "Lobbying against Environmental Regulation vs. Lobbying for Loopholes," Working Papers 0301, University of Zurich, Socioeconomic Institute. [Downloadable!]
    Other versions:
  4. Peter Zweifel & Harry Telser & Stephan Vaterlaus, 2005. "Consumer Resistance Against Regulation: The Case of Health Care," Working Papers 0505, University of Zurich, Socioeconomic Institute. [Downloadable!]
  5. Stefan Boes & Rainer Winkelmann, 2005. "Ordered Response Models," Working Papers 0507, University of Zurich, Socioeconomic Institute. [Downloadable!]
    Other versions:
  6. Stefan Buehler & Armin Schmutzler, 2003. "Asymmetric Vertical Integration," Working Papers 0306, University of Zurich, Socioeconomic Institute, revised Nov 2004. [Downloadable!]
    Other versions:
  7. Michael Breuer, 2004. "Optimal Insurance Contracts without the Non-Negativity Constraint on Indemnities Revisited," Working Papers 0406, University of Zurich, Socioeconomic Institute. [Downloadable!]
  8. Hans Gersbach & Armin Schmutzler, 2004. "Globalization and General Worker Training," Working Papers 0403, University of Zurich, Socioeconomic Institute. [Downloadable!]
  9. Bühler, Stefan & Schmutzler, Armin, 2003. "Who Integrates?," CEPR Discussion Papers 4066, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Harry Telser & Karolin Becker & Peter Zweifel, 2004. "Validity and Reliability of Willingness-to-Pay Estimates: Evidence from Two Overlapping Discrete-Choice Experiments," Working Papers 0412, University of Zurich, Socioeconomic Institute, revised Mar 2008. [Downloadable!]
  11. Harry Telser & Peter Zweifel, 2003. "Validity of Discrete-Choice Experiments - Evidence for Health Risk Reduction," Working Papers 0313, University of Zurich, Socioeconomic Institute, revised Feb 2005. [Downloadable!]
  12. Simon Loertscher & Yves Schneider, 2005. "Switching Costs, Firm Size, and Market Structure," Working Papers 0508, University of Zurich, Socioeconomic Institute. [Downloadable!]
    Other versions:
  13. Michael Breuer, 2003. "Multiple Losses, Ex-Ante Moral Hazard, and the Non-Optimality of the Standard Insurance Contract," Working Papers 0302, University of Zurich, Socioeconomic Institute, revised Apr 2003. [Downloadable!]
  14. Michael Breuer, 2004. "Deductible or Co-Insurance: Which is the Better Insurance Contract under Adverse Selection?," Working Papers 0401, University of Zurich, Socioeconomic Institute, revised Oct 2004. [Downloadable!]
  15. Stefan Buehler & Armin Schmutzler, 2005. "On The Role of Access Charges Under Network Competition," Working Papers 0501, University of Zurich, Socioeconomic Institute. [Downloadable!]
Statistics
Access and download statistics

Did you know? You too can volunteer for RePEc, for example by editing a NEP report.

This page was last updated on 2008-7-15.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.