TOTM
Vertical Integration and Retail Gasoline Prices Revisited
Truth on the Market
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A trio of Federal Trade Commission economists (Christopher Taylor, Paul Zimmerman, & Nicholas Kreisle) have revisited Justine Hastings’ 2004 AER analysis of the ARCO/ Thrifty vertical merger in their paper, “Vertical Relationships and Competition in the Retail Gasoline Market: Comment.” (HT: Danny Sokol). Hastings’ analysis is viewed as particularly important because it is one of the few empirical results that suggests that vertical integration is associated with lower retail prices and that regulations restricting vertical integration might improve welfare.
