Who is selling you chiquilitros of gasoline?

Santiago Guerrero ()
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Santiago Guerrero: UC Berkeley

No 201123, Working Papers from Latin American and Caribbean Environmental Economics Program

Abstract: In 2006, after years of monitoring and fining gasoline stations that charge consumers for more gasoline than is delivered, the government of Mexico began to disclose information online about gas stations that had been caught violating fuel supplying standards. Newspapers in some municipalities also published lists of local gas stations caught skimming gasoline. Using data from inspection histories and local news reports, I estimate the impact of this two-fold information disclosure on the probability of future regulatory compliance. I find that disclosing information online decreases by 20% the probability that any gas station would be found in violation in subsequent periods. I also find that the impact of disclosing information online and through the newspapers has stronger effects on the probability of violating regulations for those gas stations that had been found in violation prior to the reports than on those gas stations that have been complying with regulations. The website and newspaper reports are each estimated to decrease by 27% the probability of violation for gas stations with a history of noncompliance. I surmise that gas stations correct their behavior in response to the potential market losses from exposure to bad publicity in the news. Using a unique dataset with monthly gasoline sales at the gas station level, I also estimate the effect of newspaper reports on monthly gasoline sales; I find that violators that make it into the news suffer a loss in sales of 2.2% to 2.4% in the month of the report’s publication. The results suggest that public disclosure of a firm’s behavior through the media can serve as a complementary tool for inspections and sanctions in contexts in which the sanctioning powers of regulatory agencies are weak.

Pages: 42 pages
Date: 2011, Revised 2011
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