Review of Industrial Organization 21: 399–418, 2002.
© 2002 Kluwer Academic Publishers. Printed in the Netherlands.
The Effect of the Repsol-YPF Merger on the
Argentine Gasoline Market
Universidad del CEMA, Av. Córdoba 374, Piso 7, (C1054AAP) Buenos Aires, Argentina
Abstract. This paper presents alternative models of oligopoly behavior for the Argentine gasoline
market and applies parametric estimations to analyze the effect that the Repsol-YPF merger had on
that market. Using monthly data for the different provinces of Argentina during 1998–2000, we make
an evaluation of that effect. After performing a series of nested and non-nested hypothesis tests, we
conclude that we cannot reject the hypothesis that the market was a Cournot oligopoly before the
merger, and after that it became one with a price leader (Repsol-YPF). This implies an efﬁciency
loss estimated in more than $36 million per month.
Key words: Gasoline market, hypothesis testing, mergers, oligopoly behavior.
JEL Classiﬁcations: C33, L13, L71.
The aim of this paper is to analyze the behavior of the Argentine gasoline market
and to evaluate the competitive effects on that market of the merger between Repsol
and YPF, which took place in August 1999. In doing so, we attempt to answer the
(a) Did the merger have an impact on the prices and quantities traded in the
(b) Which market structure explains the behavior of the industry better?
(c) Did that structure change as a consequence of the merger?
(d) Which are the welfare implications of that change?
In order to answer those questions, we use a data set that contains monthly
gasoline price information by province for YPF during the period 1998–2000. We
also use data on quantities, market shares, oil prices, population and GDP.
The paper is organized as follows. In the ﬁrst section we provide a brief review
of the literature about merger evaluation and we discuss the importance of the
Repsol-YPF merger in the context of antitrust policy in Argentina. In the second
we describe the basic characteristics of the Argentine gasoline market for the period
under study, and the changes that took place as a consequence of the merger. In the
third section we present the theoretical model used to answer our questions, and in
the fourth we analyze the estimation results obtained. In the ﬁfth section we derive