Vertical Relationships and Competition in Retail Gasoline Markets: Comment

Federal Trade Commission, Bureau of Economics, Working Paper No. 291

22 Pages Posted: 27 Sep 2007

See all articles by Christopher T. Taylor

Christopher T. Taylor

U.S. Federal Trade Commission - Bureau of Economics

Paul R. Zimmerman

U.S. Federal Trade Commission - Bureau of Economics

Nicholas Kreisle

U.S. Federal Trade Commission - Bureau of Economics

Date Written: September 27, 2007

Abstract

In a paper in the March 2004 AER, Justine Hastings concludes that the acquisition of an independent gasoline retailer, Thrifty, by a vertically integrated firm, ARCO, is associated with sizable price increases at competing stations. To better understand the novel mechanism to which she attributes this effect - which combines vertical integration and rebranding - we attempted but ultimately failed to reproduce the results using alternative data. In addition, we show that the welfare effects of the transaction are ambiguous in the theoretical model which she posits as underlying the empirical results.

Keywords: Gasoline, Merger Retrospective, Retail, Replication

JEL Classification: L41, L42, L71

Suggested Citation

Taylor, Christopher T. and Zimmerman, Paul R. and Kreisle, Nicholas, Vertical Relationships and Competition in Retail Gasoline Markets: Comment (September 27, 2007). Federal Trade Commission, Bureau of Economics, Working Paper No. 291, Available at SSRN: https://ssrn.com/abstract=1017567 or http://dx.doi.org/10.2139/ssrn.1017567

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

Paul R. Zimmerman

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

601 New Jersey Ave. NW
Rm. 8103
Washington, DC 20580
United States

HOME PAGE: http://paul.r.zimmerman.googlepages.com/

Nicholas Kreisle

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

601 Pennsylvania Avenue, NW
Washington, DC 20580
United States

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