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Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon?

Nguyen-Ones, Mai and Frode Steen

No 12879, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Applying detailed consecutive daily micro data at the gasoline station level from Sweden we estimate a structural model to uncover the degree of competition in the gasoline retail market. We find that retailers do exercise market power, but despite the high upstream concentration, the market power is very limited on the downstream level. The degree of market power varies with both the distance to the nearest station and the local density of gasoline stations. A higher level of service tends to raise a seller's market power; self-service stations have close to no market power. Contractual form and brand identity also seem to matter. We find a clear result: local station characteristics significantly affect the degree of market power. Our results indicate that local differences in station characteristics can more than offset the average market power found for the whole market.

Keywords: Gasoline markets; local market competition; market power; markup estimation (search for similar items in EconPapers)
JEL-codes: D22 L13 L25 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ene and nep-ure
Date: 2018-04
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Working Paper: Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon? (2018) Downloads
Working Paper: Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon? (2018) Downloads
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