Estimating Vertical Foreclosure in U.S. Gasoline Supply
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
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Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0212.Length: 38 pages
Date of creation: Nov 2002
Date of revision:
Handle: RePEc:soz:wpaper:0212
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Related research
Keywords: vertical integration; separation; foreclosure; market conduct; petroleum industry;Other versions of this item:
- BŸhler, Stefan & Zava Aydemir, 2003. "Estimating Vertical Foreclosure in U.S. Gasoline Supply," Royal Economic Society Annual Conference 2003 33, Royal Economic Society.
- 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
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Stefan Buehler & Justus Haucap, 2003.
"Strategic Outsourcing Revisited,"
Working Papers
0305, University of Zurich, Socioeconomic Institute.
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- Andreas Polk & Armin Schmutzler, 2003.
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