Open Daily: 10am - 10pm | Alley door pickup 10am - 7pm 3038 Hennepin Ave Minneapolis, MN
612-822-4611

  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Local Market Structure and Strategic Organizational Form Choices: Evidence from Gasoline Stations

Local Market Structure and Strategic Organizational Form Choices: Evidence from Gasoline Stations

Federal Trade Commission

Paperback

Business General

ISBN10: 1502491052
ISBN13: 9781502491053
Publisher: Createspace
Published: Sep 26 2014
Pages: 42
Weight: 0.27
Height: 0.09 Width: 8.50 Depth: 11.02
Language: English
An extensive literature shows that agency issues and transactions costs influence vertical integration. Another mature literature indicates that market structure influences competitive behavior. However, less consideration has been given to how vertical integration and market structure may interact. The Federal Trade Commission addresses this gap by focusing on the potential for moral hazard caused by intra-firm competition in retail gasoline markets. It is argued that when multiple stations share a common brand in a market, a vertically separated station has an incentive to deviate from the cooperative strategy that the brand-owning refiner would prefer. This book empirically tests this prediction using rich data, and find evidence of such moral hazard. Moreover, it's found that refiners behave in a way consistent with the desire to minimize it: They are more likely to employ vertically separated contracts in markets where the number of affiliated stations is small.

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