Vertical Separation Increases Gasoline Prices

12 Pages Posted: 7 Feb 2015

See all articles by Nathan Wilson

Nathan Wilson

Government of the United States of America - Federal Trade Commission, Bureau of Economics

Date Written: April 2015

Abstract

I examine the relationship between vertical separation and gasoline stations’ prices and sales. The endogeneity of stations’ organizational forms is addressed using both panel methods and an instrumental variables strategy. Controlling for the endogeneity of form, I find that vertical separation raises margins by 25%–45% but does not have a statistically significant impact on output. I interpret these results as suggesting that vertical separation induces local agents to exert effort in ways that increase consumers’ demand.

JEL Classification: L14, L24, L81

Suggested Citation

Wilson, Nathan, Vertical Separation Increases Gasoline Prices (April 2015). Economic Inquiry, Vol. 53, Issue 2, pp. 1380-1391, 2015. Available at SSRN: https://ssrn.com/abstract=2561694 or http://dx.doi.org/10.1111/ecin.12203

Nathan Wilson (Contact Author)

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

600 Pennsylvania Avenue, NW
Washington, DC 20580
United States
202 326 3485 (Phone)

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