Driving Competition in Local Gasoline Markets

Price controls and competition in gasoline retail markets∗

We estimate the effect of a price floor regulation implemented in the Canadian province of Quebec beginning in 1997 and find that it substantially reduced the entry and exit of stations in local Quebec markets. We show that as a result of the policy, competition was higher and prices were lower in Quebec compared with a control group of unregulated markets in the neighboring province of Ontario...

Flex Cars and Competition in Ethanol and Gasoline Retail Markets

In Brazil, gasoline and ethanol coexist as automotive fuels and are becoming closer substitutes as flex cars become more widely adopted. We employ this source of variation in a large panel of weekly prices at the station level to show that fuel prices have fallen in response to this change. This finding is evidence of market power in fuel retail and indicates that innovations that increase cons...

Competition and Cooperation in Retail Gasoline Markets: An Empirical Study

Local retail gasoline markets offer a relatively low cost opportunity to test a number of hypotheses from the industrial organization literature regarding the interdependence of pricing choices. Is there tacit collusion among retailers? Or does the strong correlation of prices represent the natural workings of a highly competitive market (i.e. the law of one price)? Is there evidence of price l...

Entry and Competition in Local Hospital Markets

We extend the entry model developed by Bresnahan and Reiss to make use of quantity information, and apply it to data on the U.S. hospital industry. The Bresnahan and Reiss model infers changes in the toughness of competition from entry threshold ratios. Entry threshold ratios, however, identify the product of changes in the toughness of competition and changes in fixed costs. By using quantity ...

Pricing in Retail Gasoline Markets