Shell shocked: The impact of foreign entry on the gasoline retail market in China

Robert Elliott (), Puyang Sun and Tong Zhu

Energy Economics, 2020, vol. 86, issue C

Abstract: Since joining the WTO in 2001 restrictions on foreign entry into China's energy sector have been steadily reduced. We investigate the impact of Royal Dutch Shell's entry on the pricing behavior of three varieties of gasoline in the retail market of China. Using a difference in difference pairwise estimator we show that a year after entry, the average absolute price differential of gasoline between two cities increased by around 1.4%, before falling the following year. In other words, Shell's entry caused prices to diverge but only for a short period of time. The largest price effect was found for highly refined fuels in Western cities. Similar results are found when we examine the effect of entry of the top four foreign retailers. Policy implications are discussed.

Keywords: Royal Dutch Shell; Price dispersion; Gasoline; Energy (search for similar items in EconPapers)
JEL-codes: E31 L13 L81 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:86:y:2020:i:c:s0140988320300293

DOI: 10.1016/j.eneco.2020.104690

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