The Costs of Regulation: Branded Open Supply and Uniform Pricing of Gasoline
This paper examines recent proposals to alter distribution arrangements for gasoline within California. Specifically, these proposals would permit a company's branded dealer to obtain supplies from any point in its affiliated refiner's distribution network. Furthermore, the prices charged by refiners at each distribution point would be the same for dealers and distributors alike. In this analysis, we consider how the major oil companies would likely react to such changes, and how their expected reactions would affect the prices that California drivers pay for gasoline. For this purpose, we construct an economic model of a hypothetical distribution system that might arise if these proposals were enacted. The primary finding of this study is that imposing uniform prices on the leading refiners in California would lead to higher delivered prices of gasoline, on average, than those found currently. This result follows from the presence of competitive markets in some local markets that would not otherwise exist. By eliminating geographic price discrimination, these proposals would suppress competitive pressures and promote higher prices.
Volume (Year): 10 (2003)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CIJB20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CIJB20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barron, John M & Umbeck, John R, 1984. "The Effects of Different Contractual Arrangements: The Case of Retail Gasoline Markets," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 313-28, October.
- Blass, Asher A & Carlton, Dennis W, 2001. "The Choice of Organizational Form in Gasoline Retailing and the Cost of Laws That Limit That Choice," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 511-24, October.
- 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.
- Holmes, Thomas J, 1989. "The Effects of Third-Degree Price Discrimination in Oligopoly," American Economic Review, American Economic Association, vol. 79(1), pages 244-250, March.
When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:10:y:2003:i:2:p:135-155. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.