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Market Power and Structure in the Retail Motor Fuel Market

Author

Listed:
  • Harry O'Rahilly

    (Department of Economics and School of Politics and International Relations, University College Dublin, Dublin, Ireland)

  • Patrick Paul Walsh

    (Department of Economics and School of Politics and International Relations, University College Dublin, Dublin, Ireland)

Abstract

We model the retail motor fuel market in Ireland in a two-stage market entry game, with exogenous sunk costs in stage one, and price competition with horizontal product differentiation in stage two, utilizing Salop (1979). Using GIS tools, we show how driving times, benchmarked against road distance and straight-line measures, alter estimates of the disutility of traveling between rival locations. We estimate a robust and unbiased long-run equilibrium relationship between mark-ups and market structure, identified by driving times between locations to conduct an ex-post evaluation of a merger and divestment remedies in the retail motor fuel market in Ireland.

Suggested Citation

  • Harry O'Rahilly & Patrick Paul Walsh, 2024. "Market Power and Structure in the Retail Motor Fuel Market," Working Papers 202404, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:202404
    as

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    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp202404.pdf
    File Function: First version, 2024
    Download Restriction: no
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    More about this item

    Keywords

    Market Structure; Performance; Spatial Econometrics;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy

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