Market Power in Retail Gasoline Markets

Mai Nguyen-Ones and Frode Steen
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Mai Nguyen-Ones: Dept of Business and Management Science NHH, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway

No 21/2019, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: We estimate a structural model to uncover the degree of competition in retail gasoline markets using daily station-level data on quantity and price from the Swedish market. The structural model enables us to consider key features on both the demand and supply side that are important when evaluating retailers’ ability to obtain market power. Endowed with station-level information on service level, contractual form and number of nearby stations, we take into account the main drivers of differentiation in the local market. Our findings suggest that retailers in general exercise significant intermediate levels of market power. Further, local station characteristics significantly affect to which extent stations are able to extract market power. Results are robust to different estimation methods.

Keywords: Gasoline markets; market power; markup estimation; local market competition (search for similar items in EconPapers)
JEL-codes: D22 L13 L25 L81 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018-04-13, Revised 2019-07-01
New Economics Papers: this item is included in nep-com, nep-ene, nep-ore, nep-reg and nep-ure
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Citations: View citations in EconPapers (1)

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