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Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Comment*

* This paper is a replication of an original study

Author

Listed:
  • Christopher T. Taylor
  • Nicholas M. Kreisle
  • Paul R. Zimmerman

Abstract

In a paper in the March 2004 AER, Justine Hastings concludes that the acquisition of an independent gasoline retailer, Thrifty, by a vertically integrated firm, ARCO, is associated with sizable price increases at competing stations. To better understand the mechanism to which she attributes this effect -- which combines vertical integration and rebranding -- we attempted but ultimately failed to reproduce the results using alternative data.

Suggested Citation

  • 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 1269-1276, June.
    • Handle: RePEc:aea:aecrev:v:100:y:2010:i:3:p:1269-76
    Note: DOI: 10.1257/aer.100.3.1269
    as

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.3.1269
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    References listed on IDEAS

    as
    1. Justine S. Hastings, 2004. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California," American Economic Review, American Economic Association, vol. 94(1), pages 317-328, March.
    2. Christopher T. Taylor & Daniel S. Hosken, 2007. "The Economic Effects Of The Marathon‐Ashland Joint Venture: The Importance Of Industry Supply Shocks And Vertical Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 419-451, September.
    3. Justine S. Hastings & Richard J. Gilbert, 2005. "Market Power, Vertical Integration And The Wholesale Price Of Gasoline," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 469-492, December.
    4. Daniel S. Hamermesh, 2007. "Viewpoint: Replication in economics," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 715-733, August.
    5. John Simpson & Christopher Taylor, 2008. "Do Gasoline Mergers Affect Consumer Prices? The Marathon Ashland Petroleum and Ultramar Diamond Shamrock Transaction," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 135-152, February.
    6. Hamermesh, Daniel S., 2007. "Replication in Economics," IZA Discussion Papers 2760, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Marissa Beck & Fiona Scott Morton, 2021. "Evaluating the Evidence on Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 273-302, September.
    2. Mueller-Langer, Frank & Fecher, Benedikt & Harhoff, Dietmar & Wagner, Gert G., 2019. "Replication studies in economics—How many and which papers are chosen for replication, and why?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48(1), pages 62-83.
    3. Philippe Choné & Laurent Linnemer, 2012. "A Treatment Effect Method for Merger Analysis with an Application to Parking Prices in P aris," Journal of Industrial Economics, Wiley Blackwell, vol. 60(4), pages 631-656, December.
    4. Adriaan R. Soetevent & Marco A. Haan & Pim Heijnen, 2014. "Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 467-502, September.
    5. Packalen, Mikko & Sen, Anindya, 2013. "Static and dynamic merger effects: A market share based empirical analysis," International Review of Law and Economics, Elsevier, vol. 36(C), pages 12-24.
    6. Deborah Haas-Wilson & Michael Vita, 2011. "Mergers between Competing Hospitals: Lessons from Retrospective Analyses," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 1-4.
    7. repec:dgr:rugsom:14027-eef is not listed on IDEAS
    8. Haucap, Justus & Heimeshoff, Ulrich & Siekmann, Manuel, 2016. "Selling gasoline as a by-product: The impact of market structure on local prices," DICE Discussion Papers 240, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Bruzikas, Tadas & Soetevent, Adriaan, 2014. "Detailed data and changes in market structure," Research Report 14027-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    10. Franco Mairuzzo & Peter Ormosi, 2022. "Do the poor pay more for increasing market concentration? A study of retail petroleum," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2021-08, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    11. Tadas Bruzikas & Adriaan R. Soetevent, 2014. "Detailed Data and Changes in Market Structure: The Move to Unmanned Gasoline Service Stations," Tinbergen Institute Discussion Papers 14-123/VII, Tinbergen Institute.
    12. Bello, Alejandro & Contín-Pilart, Ignacio, 2012. "Taxes, cost and demand shifters as determinants in the regional gasoline price formation process: Evidence from Spain," Energy Policy, Elsevier, vol. 48(C), pages 439-448.
    13. Koh, Kanghyok & Jeon, Sungho & Lee, Jinhyuk, 2022. "The effects of price competition on firms' operations and market price: Evidence from a retail gasoline market," Energy Economics, Elsevier, vol. 108(C).
    14. 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.
    15. Nathan E. Wilson, 2015. "Local Market Structure and Strategic Organizational Form Choices: Evidence from Gasoline Stations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(1), pages 119-140, February.
    16. Nikolic, Adriana & Weiss, Christoph, 2014. "Spatial interactions in location decisions: Empirical evidence from a Bayesian spatial probit model," Department of Economics Working Paper Series 177, WU Vienna University of Economics and Business.
    17. Adriaan R. Soetevent & Marco A. Haan & Pim Heijnen, 2008. "Do Auctions and Forced Divestitures increase Competition?," Tinbergen Institute Discussion Papers 08-117/1, Tinbergen Institute, revised 02 Aug 2011.
    18. Mariano Tappata & Jing Yan, 2017. "Competition in Retail Petrol Markets," Australian Economic Papers, Wiley Blackwell, vol. 56(3), pages 201-218, September.
    19. Mehmet Efe Biresselioglu & Muhittin Hakan Demir & Evrim Ozyorulmaz, 2014. "The Rationale behind Turkey's High Gasoline Prices," Energy & Environment, , vol. 25(8), pages 1359-1379, December.
    20. Arezoo Ghazanfari, 2022. "What Drives Petrol Price Dispersion across Australian Cities?," Energies, MDPI, vol. 15(16), pages 1-24, August.

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    Replication

    This item is a replication of:
  • Justine S. Hastings, 2004. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California," American Economic Review, American Economic Association, vol. 94(1), pages 317-328, March.

    • More about this item

    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
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Comment (AER 2010) in ReplicationWiki

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