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
Date Written: September 27, 2007
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: Suggested Citation