Market Fragmenting Regulation: Why Gasoline Costs so Much (and Why it's Going to Cost Even More)
Andrew P. Morriss
University of Alabama School of Law; PERC - Property and Environment Research Center; George Mason University - Mercatus Center
Case Western Reserve University - Institute for Global Security Law and Policy
Illinois Public Law Research Paper No. 06-11
Case Legal Studies Research Paper No. 07-01
U Illinois Law & Economics Research Paper No. LE06-030
Gasoline markets today are dangerously fragmented, the result of almost one hundred years of often-contradictory economic and environmental regulations. In this paper, we analyze that regulatory history, highlighting how the unintended consequences of regulation have been to reverse market pressures toward a broad, deep national market in a commodity, pushing the United States toward a series of loosely connected regional markets. As a result, the American economy is vulnerable to natural disasters, terrorist attacks, and foreign dictators in ways that it need not be. In addition, the weakening of market forces produces higher prices for consumers and reduced innovation by refiners. We conclude by suggesting steps that can be taken to reduce this vulnerability and improve gasoline markets.
Number of Pages in PDF File: 88working papers series
Date posted: September 6, 2006
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