The Economic Effects of the Marathon-Ashland Joint Venture: The Importance of Industry Supply Shocks and Vertical Market Structure

33 Pages Posted: 14 Sep 2007

See all articles by Christopher T. Taylor

Christopher T. Taylor

U.S. Federal Trade Commission - Bureau of Economics

Daniel S. Hosken

Government of the United States of America - Federal Trade Commission

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Abstract

This study measures the effects of the Marathon/Ashland Petroleum (MAP) joint venture on rack and retail reformulated (RFG) gasoline prices in the four cities where both firms sold RFG before the joint venture. MAP was an early transaction in the recent era of petroleum mergers and resulted in large regional increases in concentration. While wholesale (rack) prices increased in the two cities experiencing the largest change in market structure in the year following the transaction, retail prices did not increase. Our results also highlight the importance of identifying the marginal source of supply in correctly identifying merger effects.

Suggested Citation

Taylor, Christopher T. and Hosken, Daniel S., The Economic Effects of the Marathon-Ashland Joint Venture: The Importance of Industry Supply Shocks and Vertical Market Structure. Journal of Industrial Economics, Vol. 55, No. 3, pp. 419-451, September 2007. Available at SSRN: https://ssrn.com/abstract=1013732 or http://dx.doi.org/10.1111/j.1467-6451.2007.00318.x

Christopher T. Taylor (Contact Author)

U.S. Federal Trade Commission - Bureau of Economics ( email )

601 Pennsylvania Avenue, NW
Antitrust Division
Washington, DC 20580
United States

Daniel S. Hosken

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

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