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Gasoline price differences: taxes, pollution regulations, mergers, market power, and market conditions

  • Chouinard, Hayley
  • Perloff, Jeffrey M

    ()

    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

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.

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File URL: http://repositories.cdlib.org/are_ucb/951
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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 951.

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Length: 35 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:are:cudare:951
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