An Economic Perspective on Mexico's Nascent Deregulation of Retail Petroleum Markets

Lucas W. Davis, Shaun Mcrae, and Enrique Seira Bejarano
Authors registered in the RePEc Author Service: Shaun David McRae

Economics of Energy & Environmental Policy, 2019, vol. Volume 8, issue Number 2

Abstract: Retail petroleum markets in Mexico are on the cusp of a historic deregulation. For decades, all 11,000 gasoline stations nationwide have carried the brand of the state-owned petroleum company Pemex and sold Pemex gasoline at federally regulated retail prices. This industry structure is changing, however, as part of Mexico's broader energy reforms aimed at increasing private investment. Since April 2016, independent companies can import, transport, store, distribute, and sell gasoline and diesel. In this paper, we provide an economic perspective on Mexico's nascent deregulation. Although in many ways the reforms are unprecedented, we argue that past experiences in other markets give important clues about what to expect, as well as about potential pitfalls. Turning Mexico's retail petroleum sector into a competitive market will not be easy, but the deregulation has the potential to increase efficiency and, eventually, to reduce prices.Keywords: Market Deregulation, Gasoline Stations, Price Competition, Product Differentiation, Vertical Integration

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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