Price discrimination and free-entry markets: the case of gasoline

J. Mixon and Noel D. Uri

Applied Energy, 1987, vol. 26, issue 1, 7 pages

Abstract: S. Borenstein has demonstrated the compatibility of monopolistic competition and price discrimination. This paper applies this model to an industry that is often cited as the epitome of monopolistic competition, namely retail gasoline. It derives a hypothesis regarding the price spread between unleaded and leaded gasoline from a monopolistic competition model and tests that hypothesis. The empirical estimates are consistent with the model's predictions.

Date: 1987
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