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Vertical Separation Increases Gasoline Prices

Author

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  • Nathan E. Wilson

Abstract

type="main" xml:id="ecin12203-abs-0001"> 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 L14, L24, L81)

Suggested Citation

  • Nathan E. Wilson, 2015. "Vertical Separation Increases Gasoline Prices," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1380-1391, April.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:2:p:1380-1391
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    File URL: http://hdl.handle.net/10.1111/ecin.2015.53.issue-2
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    Cited by:

    1. Koch, Thomas G. & Wendling, Brett W. & Wilson, Nathan E., 2017. "How vertical integration affects the quantity and cost of care for Medicare beneficiaries," Journal of Health Economics, Elsevier, vol. 52(C), pages 19-32.
    2. Youping Li & Jie Shuai, 2017. "Vertical separation with location–price competition," Journal of Economics, Springer, vol. 121(3), pages 255-266, July.

    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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