The impact of major fuel retailers on regional New South Wales petrol prices

Eddie Oczkowski, Alfred Wong and Kishor Sharma

Economic Analysis and Policy, 2018, vol. 57, issue C, 44-59

Abstract: Consumer discontent suggests the lack of competition and the absence of independent retailers in Australian regional centres maintains upward pressure on petrol prices. These claims are examined by estimating a reduced form price model to assess the impact that major retailer market concentration, station density, brand effects and other variables may have on prices. Employing data from the New South Wales government’s mandatory FuelCheck reporting system, higher degrees of market concentration and lower station density in regional centres are found to impact prices positively. These findings are robust across data types including: individual station level retail prices, regional averages, retailer margins and alternative Australian Competition and Consumer Commission data. The negative price impacts of introducing an additional non-major retailer are estimated for individual regional centres and on average range from one half to one and half cents per litre depending on fuel type. These estimates appear to be small which, in part, may be the consequence of the sample focus on regional centres only and the introduction of FuelCheck and its objective to improve price transparency in the market.

Keywords: Petrol prices; Market concentration; Regional markets (search for similar items in EconPapers)
JEL-codes: L11 L91 R10 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:57:y:2018:i:c:p:44-59

DOI: 10.1016/j.eap.2017.10.004

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