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An Economic Perspective on Mexico's Nascent Deregulation of Retail Petroleum Markets

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  • Lucas W. Davis
  • Shaun McRae
  • Enrique Seira Bejarano

Abstract

Retail petroleum markets in Mexico are on the cusp of a historic deregulation. For decades, all 11,000 gasoline stations nationwide have carried the brand of the state-owned petroleum company Pemex and sold Pemex gasoline at federally regulated retail prices. This industry structure is changing, however, as part of Mexico's broader energy reforms aimed at increasing private investment. Since April 2016, independent companies can import, transport, store, distribute, and sell gasoline and diesel. In this paper, we provide an economic perspective on Mexico's nascent deregulation. Although in many ways the reforms are unprecedented, we argue that past experiences in other markets give important clues about what to expect, as well as about potential pitfalls. Turning Mexico's retail petroleum sector into a competitive market will not be easy, but the deregulation has enormous potential to increase efficiency and, eventually, to reduce prices.

Suggested Citation

  • Lucas W. Davis & Shaun McRae & Enrique Seira Bejarano, 2018. "An Economic Perspective on Mexico's Nascent Deregulation of Retail Petroleum Markets," NBER Working Papers 24547, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24547
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    Cited by:

    1. Benjamín Contreras Astiazarán & René Leal Vizcaíno & Jordán Mosqueda & Alejandrina Sacelcedo, 2020. "Competition and Coordination in the Mexican Retail Market for Gasoline," Working Papers 2020-15, Banco de México.
    2. Davis, Lucas W., 2021. "Estimating the price elasticity of demand for subways: Evidence from Mexico," Regional Science and Urban Economics, Elsevier, vol. 87(C).

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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