Publicación: Competition and Competitors: Evidence from the Retail Fuel Market
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Fecha
2023
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info:eu-repo/semantics/openAccess
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Sage Journals
Resumen
Policy makers and antitrust authorities are concerned about the lack of competition in the fuel retail market and its impact on consumer prices. The aim of this paper is to empirically evaluate the role of the intensity of competition and competitors’ brand affiliation on retail fuel prices. To this end, we use a panel data set with detailed daily on nearly 8,500 gas stations and 2 million price observations; we estimate a reduced-form fuel price equation that accounts for supply (input costs and local competition) and demand shifters (income, traffic intensity, and location) as well as for brand and time fixed effects. We use an instrumental
variable estimation strategy, to account for the endogeneity of the intensity of competition.
Our results show that premium brands and low-cost brands affect the prices of rival firms in an opposite way. On the one hand, premium brands soften competition in the local markets where they operate and thereby allow their rivals to set higher prices. Besides, price setting by premium-brand stations react differently depending on whether the nearest rival sells the same brand (a friendly competitor) or some other brand. By contrast, low-cost brands contribute to reducing prices through their own prices (direct effect), thereby encouraging competitors to lower their prices (indirect effect). Our results suggest that regulation limiting
the entry of premium operators whilst promoting the entry of low cost gas stations will enhance competition at the retail level.
Descripción
This is the Accepted Manuscript of an article published by Sage Journal in "Energy Journal" on Nov 2023, available online: https://doi.org/10.5547/01956574.44.6.xgon
Este es el manuscrito aceptado de un artículo publicado por Sage Journalen "Energy Journal" en Nov 2023, disponible en línea: https://doi.org/10.5547/01956574.44.6.xgon
Categorías UNESCO
Palabras clave
fuel prices, local market competition, sntitrust regulation, Spain
Citación
González, X. y Moral, MJ. (2023), “Competition and Competitors: Evidence from the Retail Fuel Market”, The Energy Journal, 44 (6). https://doi.org/10.5547/01956574.44.6.xgon
Centro
Facultades y escuelas::Facultad de Ciencias Económicas y Empresariales
Departamento
Economía de la Empresa y Contabilidad