The Inner Workings of a Hub-and-Spoke Cartel in the Automotive Fuel Industry

Daniel Chaves and Marco Duarte

American Economic Journal: Microeconomics, 2025, vol. 17, issue 1, 41-65

Abstract: We study the inner workings of a hub-and-spoke cartel in the Brazilian automotive fuel industry. Based on court documents and detailed price and sales data, we discuss how gas station owners (spokes) operating inside the federal capital received help from fuel distributors (hub) to reduce dispersion of and increase gasoline's retail price. We provide evidence that distributor cartel members benefited by raising wholesale prices while keeping competitors from supplying retail cartel members. We also provide theoretical foundations and empirical evidence for a new mechanism through which hubs help spokes: smoothing cost fluctuations.

JEL-codes: K21 L12 L22 L32 L71 L81 O14 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/mic.20210250

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