Is there collusion in the retail gasoline market?: an empirical approach

Abstract

This paper analyzes competition in the retail gasoline market. We focus on the market of the Canary Islands because it offers two advantages over other markets: it is easy to define the relevant market and there are markets operating under monopoly and oligopoly conditions simultaneously. The latter feature of the markets allows us to estimate a conjectural variations model that explains the average behavior of the companies in the oligopolistic market relative to the monopoly markets. The paper shows that average competition is limited despite the fact that the Canary Islands have a longer history of liberalized gasoline markets.