Does Common Ownership Cause Higher Prices? Evidence from Retail Gasoline Markets

The ownership of competing firms by investment funds, or common ownership, can cause anti-competitive product market outcomes. This paper examines the price effects of common ownership in the Western Australian (WA) retail gasoline market. Using a rich data set of daily, station-level petrol prices, I exploit the acquisition of Puma Energy by Chevron which delivered a significant shock to common ownership in the market. Through a difference-in-differences framework, I estimate that prices increased by 1.54 cents per litre on average in stations that had increased common ownership relative to unaffected stations, representing a 20% increase in margins. Puma margins also increased by 2.75 cents per litre in affected markets relative to unaffected markets. I also examine the time-varying treatment effect and find a gradual shift to the new, higher, equilibrium