Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76139
Authors: 
Aydemir, Zava
Buehler, Stefan
Year of Publication: 
2002
Series/Report no.: 
Working Paper, Socioeconomic Institute, University of Zurich 0212
Abstract: 
We examine the competitive effects of the vertical integration of gasoline refineries and retailers in the U.S. Adapting the first-order condition approach of static oligopoly games to the analysis of vertically related oligopolies, we develop a novel framework for directly evaluating the strategic foreclosure effect and the effciency benefits associated with vertical integration. Applying this framework, we find significant evidence for both vertical foreclosure and effciency benefits. The foreclosure effect dominates the effciency benefits for more than half of the refining firms in the sample. Vertical foreclosure is found to increase the wholesale price of refined gasoline by 0.2 to 0.6 cents per gallon.
Subjects: 
vertical integration
separation
foreclosure
market conduct
petroleum industry
JEL: 
L13
L22
L49
L71
Document Type: 
Working Paper

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