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Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets

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  • Adriaan R. Soetevent
  • Marco A. Haan
  • Pim Heijnen

Abstract

type="main"> To foster competition, governments can intervene by auctioning licenses to operate, or by imposing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for highway gasoline stations and imposing divestitures of such stations on the four major companies. We evaluate this policy experiment and find that the auctioning of licenses without an obligation to divest has no discernible effect on prices. An obligation to divest lowers prices by 1.3–2.3% at divested sites. Moreover, prices decrease by 0.9–1.2% at sites nearby. This suggests that the observed price decreases are at least partly due to competitive spillovers.

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  • Adriaan R. Soetevent & Marco A. Haan & Pim Heijnen, 2014. "Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 467-502, September.
    • Handle: RePEc:bla:jindec:v:62:y:2014:i:3:p:467-502
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    Cited by:

    1. Pim Heijnen & Marco A. Haan & Adriaan R. Soetevent, 2015. "Screening for collusion: a spatial statistics approach," Journal of Economic Geography, Oxford University Press, vol. 15(2), pages 417-448.
    2. Soetevent, Adriaan R. & Bružikas, Tadas, 2018. "The impact of process innovation on prices: Evidence from automated fuel retailing in The Netherlands," European Economic Review, Elsevier, vol. 110(C), pages 181-196.
    3. repec:dgr:rugsom:14027-eef is not listed on IDEAS
    4. Bruzikas, Tadas & Soetevent, Adriaan, 2014. "Detailed data and changes in market structure," Research Report 14027-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    5. Tadas Bruzikas & Adriaan R. Soetevent, 2014. "Detailed Data and Changes in Market Structure: The Move to Unmanned Gasoline Service Stations," Tinbergen Institute Discussion Papers 14-123/VII, Tinbergen Institute.
    6. Valeria Bernardo, 2018. "The effect of entry restrictions on price: evidence from the retail gasoline market," Journal of Regulatory Economics, Springer, vol. 53(1), pages 75-99, February.
    7. Brown, David P. & Eckert, Andrew & Shaffer, Blake, 2023. "Evaluating the impact of divestitures on competition: Evidence from Alberta’s wholesale electricity market," International Journal of Industrial Organization, Elsevier, vol. 89(C).

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