88 Pages Posted: 6 Sep 2006
Date Written: September 2006
Gasoline markets today are dangerously fragmented, the result of almost one hundred years of often-contradictory economic and environmental regulations. In this paper, we analyze that regulatory history, highlighting how the unintended consequences of regulation have been to reverse market pressures toward a broad, deep national market in a commodity, pushing the United States toward a series of loosely connected regional markets. As a result, the American economy is vulnerable to natural disasters, terrorist attacks, and foreign dictators in ways that it need not be. In addition, the weakening of market forces produces higher prices for consumers and reduced innovation by refiners. We conclude by suggesting steps that can be taken to reduce this vulnerability and improve gasoline markets.
Suggested Citation: Suggested Citation
Morriss, Andrew P. and Stewart, Nathaniel, Market Fragmenting Regulation: Why Gasoline Costs so Much (and Why it's Going to Cost Even More) (September 2006). Illinois Public Law Research Paper No. 06-11; Case Legal Studies Research Paper No. 07-01; U Illinois Law & Economics Research Paper No. LE06-030. Available at SSRN: https://ssrn.com/abstract=928503 or http://dx.doi.org/10.2139/ssrn.928503