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Estimating the Impacts of Outlet Rationalization on Retail Prices, Industry Concentration, and Sales: Empirical Evidence from Canadian Gasoline Markets

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  • Anindya Sen
  • Peter G.C. Townley

Abstract

"The retail gasoline industry in both Canada and the United States experienced a significant rationalization of outlets from the late 1970s through the 1990s. We estimate the impacts of reduced outlet density by exploiting the 27% decline in retail gasoline outlets across 10 Canadian cities between 1991 and 1997. Ordinary least squares and instrumental variables estimates suggest that rationalization resulted in a significant increase in retail prices, market concentration, and average outlet sales. The decline in retail outlets led to a 9% increase in retail prices, a rise in market concentration between 16% and 22%, and a 22% increase in average outlet sales". Copyright (c) 2010 Wiley Periodicals, Inc..

Suggested Citation

  • Anindya Sen & Peter G.C. Townley, 2010. "Estimating the Impacts of Outlet Rationalization on Retail Prices, Industry Concentration, and Sales: Empirical Evidence from Canadian Gasoline Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 605-633, September.
  • Handle: RePEc:bla:jemstr:v:19:y:2010:i:3:p:605-633
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    Citations

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    Cited by:

    1. repec:dgr:rugsom:14027-eef is not listed on IDEAS
    2. Mario Jametti & Agustin Redonda & Anindya Sen, 2013. "The Power to Pass on Taxes - A Test for Tax Shifting Based on Observables," CESifo Working Paper Series 4265, CESifo Group Munich.
    3. 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).
    4. Juan Luis Jiménez & Jordi Perdiguero, 2018. "Mergers and difference-in-difference estimator: Why firms do not increase prices?," European Journal of Law and Economics, Springer, vol. 45(2), pages 285-311, April.
    5. repec:eee:ecanpo:v:57:y:2018:i:c:p:44-59 is not listed on IDEAS
    6. 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.
    7. Wai Choi & Anindya Sen & Adam White, 2011. "Response of industrial customers to hourly pricing in Ontario’s deregulated electricity market," Journal of Regulatory Economics, Springer, vol. 40(3), pages 303-323, December.
    8. Andrew Eckert & Heather Eckert, 2014. "Regional Patterns in Gasoline Station Rationalization in Canada," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 99-122, March.
    9. 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.

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