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Regulation, competition and fraud: evidence from retail gas stations in Mexico

Author

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  • Arteaga, Julio Cesar
  • Flores, Daniel

Abstract

Mexican gas stations across the country buy and sell gasoline at regulated common prices. Therefore, authorities that set these prices do not take into account competition conditions of each market. In this paper we establish the effect of a regulated mark-up price as well as competition on the incentives that gas stations in Mexico have to dispense less amount of gasoline than what consumers pay for. The results of theoretical and empirical work indicate that a higher regulated mark-up price reduces the incentives of gas stations to cheat. Similarly, more intense competition among the retailers of a given market decreases the average shortage.

Suggested Citation

  • Arteaga, Julio Cesar & Flores, Daniel, 2010. "Regulation, competition and fraud: evidence from retail gas stations in Mexico," MPRA Paper 34187, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:34187
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    File URL: https://mpra.ub.uni-muenchen.de/34187/1/MPRA_paper_34187.pdf
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    References listed on IDEAS

    as
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    6. Eckert, Andrew & West, Douglas S., 2005. "Price uniformity and competition in a retail gasoline market," Journal of Economic Behavior & Organization, Elsevier, vol. 56(2), pages 219-237, February.
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    12. Marvel, Howard P, 1978. "Competition and Price Levels in the Retail Gasoline Market," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 252-258, May.
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    Cited by:

    1. Obradovits, Martin, 2014. "Austrian-style gasoline price regulation: How it may backfire," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 33-45.

    More about this item

    Keywords

    gasoline pricing; regulation; competition; fraud;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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