Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets

Tinbergen Institute Discussion Paper No. 08-117/1

41 Pages Posted: 10 Dec 2008  

Adriaan R. Soetevent

University of Groningen; Tinbergen Institute

Marco A. Haan

University of Groningen

Pim Heijnen

University of Amsterdam - Faculty of Economics and Business (FEB)

Multiple version iconThere are 2 versions of this paper

Date Written: December 8, 2008

Abstract

Where markets are insufficiently competitive, governments can intervene by auctioning licenses to operate or by forcing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for high-way gasoline stations and forcing the divestiture of outlets of four majors. We evaluate this policy experiment using panel data containing detailed price information. Accounting for non-randomness of the sites are auctioned, we find that an obligation to divest lowers prices by over 2% while the auctioning of licenses without such an obligation has no discernible effect. We find no evidence for price effects on nearby competitors.

Keywords: Divestitures, Auctions, Entry, Policy Evaluation

JEL Classification: D43, D44, L11

Suggested Citation

Soetevent, Adriaan R. and Haan, Marco A. and Heijnen, Pim, Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets (December 8, 2008). Tinbergen Institute Discussion Paper No. 08-117/1. Available at SSRN: https://ssrn.com/abstract=1313602 or http://dx.doi.org/10.2139/ssrn.1313602

Adriaan R. Soetevent (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
++ 31 50 363 7018 (Phone)

HOME PAGE: http://www.soetevent.com

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Marco A. Haan

University of Groningen ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 7327 (Phone)
+31 50 363 7227 (Fax)

Pim Heijnen

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Paper statistics

Downloads
54
Rank
313,546
Abstract Views
465