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Vertical integration and pricing outcomes in retail gasoline markets

Author

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  • Joshua Karl Austin

    (Ohio University)

Abstract

The real world impact of vertical integration on prices for consumers remains a controversial topic. Economic theory suggests that there are multiple effects of vertical integration on prices which work in opposite directions. This paper employs high frequency panel data from a regional U.S. market to determine which effects are dominant at retail gasoline stations. Using two different techniques, I find that vertically-integrated company-operated gasoline stations charge prices five to eleven cents lower than non-integrated, lessee-operated gasoline stations.

Suggested Citation

  • Joshua Karl Austin, 2015. "Vertical integration and pricing outcomes in retail gasoline markets," Economics Bulletin, AccessEcon, vol. 35(4), pages 2060-2063.
    • Handle: RePEc:ebl:ecbull:eb-15-00476
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I4-P210.pdf
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    References listed on IDEAS

    as
    1. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    2. Vita, Michael G, 2000. "Regulatory Restrictions on Vertical Integration and Control: The Competitive Impact of Gasoline Divorcement Policies," Journal of Regulatory Economics, Springer, vol. 18(3), pages 217-233, November.
    Full references (including those not matched with items on IDEAS)

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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.

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    More about this item

    Keywords

    vertical integration; retail gasoline; divorcement; fixed-effects; economics;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L8 - Industrial Organization - - Industry Studies: Services

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