14.Gasoline Pricing (102610)

14.Gasoline Pricing (102610) - Retail Gasoline Pricing...

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Retail Gasoline Pricing
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Source: Lewis (2006)
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Longer Run View of Rockets & Feathers Elements of Gasoline Costs 0 50 100 150 200 250 300 19 9 2 00 0 20 1 3 4 5 Year Cents/Gallon Crude Oil LA Spot Gasoline Taxes Retail Costs and Margin
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“Vertical Relationships and Competition in Retail Gasoline Markets” Justine Hastings, AER, 2003 Why types of stations make retail gasoline markets more competitive? Types of Relationships b/t Refiners and Retail Stations 1) Company operated (co-op) by refiner Refiner sets price 2) Lessee-dealer Lessee sets price but contracted to buy from refiner at a specific wholesale price 3) Dealer-owned 4) Independent Does not necessarily sell branded gas Do certain relationships make the market more competitive?
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• Simple correlation: – State that have banned vertical integration (“retail divorcement”) have prices 2.7 cents higher – Is this evidence that vertical integration lowers prices? • What does this tell or not tell us?
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This note was uploaded on 05/01/2011 for the course ECON 689 taught by Professor Staff during the Spring '08 term at Texas A&M.

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14.Gasoline Pricing (102610) - Retail Gasoline Pricing...

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