Does Protecting Smaller Firms Result in Lower Prices? Evidence from Canadian Gasoline Markets

Anindya Sen ()

No 2002, Working Papers from University of Waterloo, Department of Economics

Abstract: Some recent policy initiatives aimed at preserving the market share of smaller gasoline retailers have been proposed in Canada. These measures are grounded in the belief that strengthening such firms will enhance competition and result in lower prices, which is consistent with the implications of the dominant firm/competitive fringe model. Using monthly data on average retail prices and market shares across eleven Canadian cities between 1991 and 1997, I find the opposite to be true. Specifically, increased market concentration on the part of independent retailers is in fact, significantly correlated with higher retail prices. This may be due to an enhanced ability to set prices as well as higher marginal costs of production experienced by these retailers, relative to corresponding costs incurred by larger and more efficient vertically integrated firms.

Date: 2002-01, Revised 2002-01
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:wat:wpaper:02002

Access Statistics for this paper

More papers in Working Papers from University of Waterloo, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sherri Anne Arsenault ().