Will Open Supply Lower Retail Gasoline Prices?

Retail gasoline lessee-dealers have lobbied for the right to purchase their gasoline supplies from sources other than the lessor-refiners with whom they have contracted. This article examines a unique data set of gasoline prices in Los Angeles, along with corresponding market- and station-level characteristics, to gain some insights into whether the proposed "open-supply" legislation would likely lower the prices charged to consumers. Controlling for market- and station-level characteristics, the authors find that stations with the most alternative sources of gasoline supplies have significantly higher retail prices, casting serious doubt on the claims made by open-supply proponents. (JEL "L0", "L1", "L4") Copyright 2004 Western Economic Association International.