PRICE EFFECTS FROM RETAIL GASOLINE MERGERS

This paper explores the price effects of a series of oil mergers, acquisitions, and joint ventures in the decade since 1990 by estimating the price effects of the resulting increases in market concentration. Estimates from two samples, one city level and one state level, of monthly retail and wholesale gasoline prices were conducted. Market power measures were based on the number of branded retail outlets and a calculated Herfindahl-Hirshmann Index (HHI) for each in each geographic market. The mergers are found to have increased retail prices by 0.6% to 1.2% resulting in a transfer from producers to consumers of $1.2 to $2.4 billion per year but a deadweight loss of less than $15 million per year.