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Competition In Controlled And Uncontrolled Gasoline Markets

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  • T. CRAWFORD HONEYCUTT

Abstract

During the decade ending in 1981, more than 100,000 gasoline dealers exited the industry. This tremendous decline gave rise to numerous allegations that the major oil companies were engaged in anticompetitive activity designed to eliminate their dealers. This paper examines the legislative responses to these allegations, discusses some current economic issues, reviews changes in gasoline marketing before and after decontrol, and evaluates empirically the impact of these events on competition. The primary conclusions of the paper are (1) that these changes in gasoline marketing have resulted from competitive responses to changing market conditions, (2) that most statutes proposed to aid dealers in fact make their demise more likely, (3) that dealers' share of sales has stabilized after decontrol, and (4) that divorcement tends to increase market concentration significantly.

Suggested Citation

  • T. Crawford Honeycutt, 1985. "Competition In Controlled And Uncontrolled Gasoline Markets," Contemporary Economic Policy, Western Economic Association International, vol. 3(3), pages 105-118, March.
    • Handle: RePEc:bla:coecpo:v:3:y:1985:i:3:p:105-118
    DOI: 10.1111/j.1465-7287.1985.tb00812.x
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    3. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    4. Robert Fenili, 1985. "The Impact Of Decontrol On Gasoline Wholesalers And Retailers," Contemporary Economic Policy, Western Economic Association International, vol. 3(3), pages 119-130, March.
    5. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 375-390, June.
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