On the Economics of Branded Open Supply

Howard Marvel

International Journal of the Economics of Business, 2003, vol. 10, issue 2, 213-223

Abstract: Branded open supply regulations permit gasoline dealers to incur transportation costs to arbitrage price differences among terminal locations. This arbitrage increases the overall cost of transporting gasoline from refinery to consumer by substituting high-cost truck transport for cheap bulk transportation. This paper provides a simple model of how arbitrage can lead either to a less dense terminal network or, in some instances, to a less dense network of dealers than refiners would prefer. Enforceable exclusive supply agreements can increase inventory holding, provide protection against excessive price volatility, and reduce transportation costs. An end to such agreements will likely impair the ability of branded dealers to differentiate themselves from unbranded rivals.

Keywords: Gasoline; Distribution; Inventories; Open Supply (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/10.1080/13571510305064 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:10:y:2003:i:2:p:213-223

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIJB20

DOI: 10.1080/13571510305064

Access Statistics for this article

International Journal of the Economics of Business is currently edited by Eleanor Morgan

More articles in International Journal of the Economics of Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().