Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California

摘要

Since the late 1990's, West Coast cities have consistently experienced substantially higher retail gasoline prices than other regions of the country. For example, for the first week of August 1999, the price of reformulated gasoline in California was 39.6 cents higher than the average price in Gulf Coast States (about 10 cents of this difference can be attributed to higher taxes in California). In addition gasoline prices vary greatly between West Coast cities. Residents in San Diego have paid a consistent 5 to 15 cents more per gallon, on average, than Los Angeles residents. These recent price phenomena have sparked intense political debate over the causes of persistent price disparities. Much of the debate is centered around the effect of vertical contracts between refiners and retail stations on retail competition and price levels.