Persistent Link:
http://hdl.handle.net/10150/195202
Title:
Competition in the Retail Gasoline Industry
Author:
Brewer, Jed
Issue Date:
2007
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
This dissertation examines competition in the retail gasoline industry. The first chapter highlights the importance of gasoline in modern society, introduces my work, and places it in the context of the existing academic literature.The second chapter details the institutional structure and profitability of the industry. The vast majority of retail gasoline stations are not directly owned and operated by major oil companies. Instead, most stations are set up under other contractual relationships: lessee-dealer, open-dealer, jobber-owned-and-operated, and independent. Gasoline retailers make relatively low profits, as is the case in many other retail industries, and are substantially less profitable than major oil companies. Gas stations also make less money when retail prices are climbing than when they are falling. As prices rise, total station profits are near zero or negative. When retail prices are constant or falling, retailers can make positive profits.The third chapter describes the entry of big-box stores into the retail gasoline industry over the last decade. The growth of such large retailers, in all markets, has led to a great deal of controversy as smaller competitors with long-term ties to the local community have become less common. I estimate the price impact that big-box stores have on traditional gasoline retailers using cross-sectional data in two geographically diverse cities. I also examine changes in pricing following the entry of The Home Depot into a local retail gasoline market. The results show that big-box stores place statistically and economically significant downward pressure on the prices of nearby gas stations, offering a measure of the impact of the entry of a big-box store.Chapter 4 examines the nature of price competition in markets where some competing retailers sell the same brand. The price effect of having more retailers selling the same brand is theoretically unclear. High brand diversity could give individual retailers market power, thereby leading to higher prices. Low brand diversity, though, could act to facilitate collusive behavior, leading to higher prices. I find that prices are higher in markets with high brand diversity.The final chapter of the dissertation summarizes the general findings.
Type:
text; Electronic Dissertation
Keywords:
Economics; Industrial Organization; Retail Gasoline
Degree Name:
PhD
Degree Level:
doctoral
Degree Program:
Economics; Graduate College
Degree Grantor:
University of Arizona
Advisor:
Fishback, Price V.
Committee Chair:
Fishback, Price V.

Full metadata record

DC FieldValue Language
dc.language.isoENen_US
dc.titleCompetition in the Retail Gasoline Industryen_US
dc.creatorBrewer, Jeden_US
dc.contributor.authorBrewer, Jeden_US
dc.date.issued2007en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThis dissertation examines competition in the retail gasoline industry. The first chapter highlights the importance of gasoline in modern society, introduces my work, and places it in the context of the existing academic literature.The second chapter details the institutional structure and profitability of the industry. The vast majority of retail gasoline stations are not directly owned and operated by major oil companies. Instead, most stations are set up under other contractual relationships: lessee-dealer, open-dealer, jobber-owned-and-operated, and independent. Gasoline retailers make relatively low profits, as is the case in many other retail industries, and are substantially less profitable than major oil companies. Gas stations also make less money when retail prices are climbing than when they are falling. As prices rise, total station profits are near zero or negative. When retail prices are constant or falling, retailers can make positive profits.The third chapter describes the entry of big-box stores into the retail gasoline industry over the last decade. The growth of such large retailers, in all markets, has led to a great deal of controversy as smaller competitors with long-term ties to the local community have become less common. I estimate the price impact that big-box stores have on traditional gasoline retailers using cross-sectional data in two geographically diverse cities. I also examine changes in pricing following the entry of The Home Depot into a local retail gasoline market. The results show that big-box stores place statistically and economically significant downward pressure on the prices of nearby gas stations, offering a measure of the impact of the entry of a big-box store.Chapter 4 examines the nature of price competition in markets where some competing retailers sell the same brand. The price effect of having more retailers selling the same brand is theoretically unclear. High brand diversity could give individual retailers market power, thereby leading to higher prices. Low brand diversity, though, could act to facilitate collusive behavior, leading to higher prices. I find that prices are higher in markets with high brand diversity.The final chapter of the dissertation summarizes the general findings.en_US
dc.typetexten_US
dc.typeElectronic Dissertationen_US
dc.subjectEconomicsen_US
dc.subjectIndustrial Organizationen_US
dc.subjectRetail Gasolineen_US
thesis.degree.namePhDen_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineEconomicsen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorFishback, Price V.en_US
dc.contributor.chairFishback, Price V.en_US
dc.contributor.committeememberHirano, Keisukeen_US
dc.contributor.committeememberReynolds, Stanleyen_US
dc.identifier.proquest2483en_US
dc.identifier.oclc659749965en_US
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