Does Increasing the Market Share of Smaller Firms Result in Lower Prices? Empirical Evidence from the Canadian Retail Gasoline Industry

Does Increasing the Market Share of Smaller Firms Result in Lower Prices? Empirical Evidence from... Some recent policy initiatives aimed at preserving the market share of smaller or independent gasoline retailers have either been implemented or proposed in both Canada and the United States. Employing monthly data on average retail prices and market shares across eleven Canadian cities between 1991 and 1997, I find that more aggregate market share in the hands of independent retailers is correlated with higher retail prices, but indirectly associated with lower prices through the corresponding fall in market concentration among vertically integrated firms. The sum of these impacts is negative as indirect effects are larger in magnitude than corresponding direct effects. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Does Increasing the Market Share of Smaller Firms Result in Lower Prices? Empirical Evidence from the Canadian Retail Gasoline Industry

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2005 by Springer
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-005-4206-4
Publisher site
See Article on Publisher Site

Abstract

Some recent policy initiatives aimed at preserving the market share of smaller or independent gasoline retailers have either been implemented or proposed in both Canada and the United States. Employing monthly data on average retail prices and market shares across eleven Canadian cities between 1991 and 1997, I find that more aggregate market share in the hands of independent retailers is correlated with higher retail prices, but indirectly associated with lower prices through the corresponding fall in market concentration among vertically integrated firms. The sum of these impacts is negative as indirect effects are larger in magnitude than corresponding direct effects.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Mar 22, 2005

References

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