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Gasoline Price Differences: Taxes, Pollution Regulations, Mergers, Market Power, and Market Conditions

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  • Chouinard Hayley H

    (Washington State University)

  • Perloff Jeffrey M

    (University of California, Berkeley)

Abstract

Retail and wholesale gasoline prices vary over time and across geographic locations due to differences in government policies and other factors that affect demand, costs, and market power. We use a two-equation, reduced-form model to determine the relative importance of these various factors using panel data for 48 states over nine years. We find that the variation in the price of crude oil has been virtually the only major factor contributing to gasoline price variations during the 1990s. Tax variations and mergers contribute substantially more to geographic price differentials than do price discrimination, cost factors, or pollution controls.

Suggested Citation

  • Chouinard Hayley H & Perloff Jeffrey M, 2007. "Gasoline Price Differences: Taxes, Pollution Regulations, Mergers, Market Power, and Market Conditions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-28, January.
    • Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:8
    DOI: 10.2202/1935-1682.1599
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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