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Exploring the Structure and Performance of Petroleum Retail Outlets in Pakistan

Author

Listed:
  • Omer Siddique

    (Pakistan Institute of Development Economics, Islamabad.)

  • Hanzla Jalil

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

The petroleum retail industry is one of the least researched industries in Pakistan due to, perhaps, unavailability of the relevant data. This paper aims to fill this gap. Specifically, the present paper examines the structure and performance of petrol pumps in Pakistan, using primary survey data. Analysis of the data reveals that operating a petrol pump is a profitable venture and both location and non-locational variables are important in contributing to the profitability of a petrol pump. The exploratory analysis shows that the petrol pumps in urban areas and those on highways have higher sales, indicating that the geographical location of a petrol pump is important in explaining a petrol pump’s performance. According to the regression results, as the size of a petrol pump increases, its profitability increases and there is a non-linear relation between the distance variable and profitability of a petrol pump. The non-linearity implies that there exists optimal distance between two petrol pumps that maximises profits. This optimal distance is shorter for urban and non-highway petrol pumps, compared with rural and highway petrol pumps.

Suggested Citation

  • Omer Siddique & Hanzla Jalil, 2018. "Exploring the Structure and Performance of Petroleum Retail Outlets in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 57(2), pages 223-247.
    • Handle: RePEc:pid:journl:v:57:y:2018:i:2:p:223-247
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    References listed on IDEAS

    as
    1. Ministry of Finance, Government of India,, 2016. "Economic Survey 2015-16," OUP Catalogue, Oxford University Press, number 9780199469284.
    2. Schmidt, Charles G., 1983. "Location Decision-Making Within a Retail Corperation," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 13(1), pages 1-12.
    3. Janet S. Netz & Beck A. Taylor, 2002. "Maximum Or Minimum Differentiation? Location Patterns Of Retail Outlets," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 162-175, February.
    4. Patrick Biernacki & Dan Waldorf, 1981. "Snowball Sampling: Problems and Techniques of Chain Referral Sampling," Sociological Methods & Research, , vol. 10(2), pages 141-163, November.
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    More about this item

    Keywords

    Cost; Retail Business; Firm Location; Petrol Pumps;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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