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

36 Pages Posted: 2 Sep 2014

See all articles by Adriaan R. Soetevent

Adriaan R. Soetevent

University of Groningen

M.A. Haan

University of Groningen - Faculty of Economics and Business

Pim Heijnen

University of Groningen

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

To foster competition, governments can intervene by auctioning licenses to operate, or by imposing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for highway gasoline stations and imposing divestitures of such stations on the four major companies. We evaluate this policy experiment and find that the auctioning of licenses without an obligation to divest has no discernible effect on prices. An obligation to divest lowers prices by 1.3–2.3% at divested sites. Moreover, prices decrease by 0.9–1.2% at sites nearby. This suggests that the observed price decreases are at least partly due to competitive spillovers.

Suggested Citation

Soetevent, Adriaan R. and Haan, M.A. and Heijnen, Pim, Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets (September 2014). The Journal of Industrial Economics, Vol. 62, Issue 3, pp. 467-502, 2014, Available at SSRN: https://ssrn.com/abstract=2490194 or http://dx.doi.org/10.1111/joie.12054

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

M.A. Haan

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Pim Heijnen

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
203
PlumX Metrics