Abstract
The Belgian retail gasoline network is one of the densest in the world and is characterised by a maximum price agreement between the government and the oil industry. Using price data covering almost 500 points of sale located all over Belgium, the price competition among Belgian gas stations is analysed. We observe that stations located along a highway always charge the maximum price. On local markets that are sufficiently competitive, prices are below the maximum price. The analysis further suggests that the number of local competitors does not have a large impact on retail gasoline prices. However, competition is fiercer in the presence of independent gasoline retailers.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
REFERENCES
Anderson, S., A. de Palma, and J. Thisse 1992, Discrete Choice Theory of Product Differentiation, Cambridge MA, MIT Press.
Arslan, G. 2000, ‘The Italian Petrol Industry: An Empirical Investigation,’ Leuven, KU Leuven, Department of Economics.
Autorità Garante della Concurrenza et del Mercato 2000, ‘Fuel Price Setting Agreement,’ Press Release, 18, Proceeding I, 135, Roma, Autorità Garante della Concurrenza e del Mercato.
Barros, P. 1999, ‘Multimarket Competition in Banking, with an Example from the Portuguese Market,’ International Journal of Industrial Organization, 17, pp. 335–352.
Belgische Petroleum Federatie 2001, ‘De Activiteit van de Petroleumsector in België,’ Jaarverslag 2000, Brussel, Belgische Petroleum Federatie.
Bernheim, D. and M. Whinston 1990, ‘Multimarket Contact and Collusive Behaviour,’ RAND Journal of Economics, 21, pp. 37–57.
Borenstein, S. 1991, ‘Selling Costs and Switching Costs: Explaining Retail Gasoline Markets,’ RAND Journal of Economics, 22, pp. 354–369.
Borenstein, S. and A. Shepard 1996, ‘Dynamic Pricing in Retail Gasoline Markets,’ RAND Journal of Economics, 27, pp. 354–369.
Borenstein, S. and A. Shepard 2002, ‘Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets,’ RAND Journal of Economics, 33, pp. 116–139.
Castanias, R. and H. Johnson 1993, ‘Gas Wars: Retail Gasoline Price Fluctuation,’ Review of Economics and Statistics, 75, pp. 171–174.
Cayseele, P. Van 1994, De Belgische Wet op de Mededinging: Concentraties in een Industrieel Economisch en Internationaal Juridisch Perspectief, Antwerpen, Maklu.
Cayseele, P. Van and P. Mistiaen 2001, ‘De Programma-overeenkomst Petroleumproducten,’ Leuven, KU Leuven, Centrum voor Economische Studiën.
Chamberlin, E. 1933, The Theory of Monopolistic Competition, Cambridge MA, MIT Press.
Clemenz, G. and K. Gugler 2002, ‘Locational Choice and Price Competition: Some Empirical Results for the Austrian Retail Gasoline Market,’ University of Vienna, Department of Economics Working Papers, Working Paper, 0206, Vienna.
Palma, A. de, V. Ginsburgh, Y. Papageorgiou, and J. Thisse 1985, ‘The Principle of Minimum Differentiation Holds Under Sufficient Heterogeneity,’ American Economic Review, 67, pp. 297–308.
Dillen, M. and R. De Bond 1985, ‘De Programma Overeenkomst betreffende de Petroleumprodukten,’ Leuven, KU Leuven, Department of Applied Economics.
Grauwe, P. De and K. Straetmans 1991, ‘Het Programma Akkoord in de Petroleumsector: Een Ondoelmatig Systeem van Prijzencontrole,’ Leuvense Economische Standpunten, 59, Leuven, KU Leuven, Centrum voor Economische Studiën.
Hotelling, H. 1929, ‘Stability in Competition,’ Economic Journal, 39, pp. 41–57.
Knittel, C. and S. Stango 2001, ‘Price Ceilings as Focal Points for Tacit Collusion: Evidence from Credit Cards,’ Federal Reserve Bank of Chicago, Working Paper, WP 2001–12, Chicago.
Konkurrenzverket 2000, ‘Petrol Cartel faces fines of SEK 740 million,’ Press release, 14, Stockholm, Konkurrenzverket.
Long, S. 1997, Regression Models for Categorial and Limited Dependent Variables, London, Sage Publications.
Ministerie van Economische Zaken 2001, Aanvulling van de Programma-overeenkomst mei 2001, Brussel, Ministerie van Economische Zaken.
Nederlandse Mededingingsautoriteit 2001, ‘Oliemaatschappijen houden via afspraken met pomphouders prijzen kunstmatig hoog,’ Persbericht, 01–46, Den Haag, Nederlandse Mededingingsautoriteit.
Nederlandse Mededingingsautoriteit 2003, ‘NMa: geen verbod steunsystemen benzine, wel jaarlijkse rapportage marktontwikkelingen,’ Persbericht, 03–09, Den Haag, Nederlandse Mededingingsautoriteit.
Noel, M. 2001, ‘Edgeworth Price Cycles, Cost-based Pricing and Sticky Pricing in Retail Gasoline Markets,’ Cambridge MA, Department of Economics, MIT.
Onderstal, S. 2002, ‘Auctions for Extra Capacity in an Oligopolistic Market with Network Effects,’ Center Discussion Paper, 2002–33, Tilburg.
Salop, S. 1979, ‘Monopolistic Competition with Outside Goods,’ Bell Journal of Economics, 8, pp. 141–156.
Shepard, A. 1991, ‘Price Discrimination and Retail Configuration,’ Journal of Political Economy, 99, pp. 30–53.
Shepard, A. 1993, ‘Contractual Form, Retail Price, and Asset Characteristics in Gasoline Retailing,’ RAND Journal of Economics, 24, pp. 58–77.
Slade, M. 1987, ‘Interfirm Rivalry in a Repeated Game: An Empirical Test of Collusion,’ Journal of Industrial Economics, 35, pp. 499–516.
Slade, M. 1992, ‘Vancouver's Gasoline-Price Wars: An Empirical Exercise in Uncovering Supergame Strategies,’ Review of Economic Studies, 59, pp. 257–276.
Slade, M. 1996, ‘Multitask Agency and Contractual Choice: An Empirical Exploration,’ International Economic Review, 37, pp. 465–486.
Symeonidis, G. 1999, 'In Which Industries is Collusion More Likely? Evidence from the UK, CEPR Discussion Paper, 2301, London.
Tirole, J. 1988, The Theory of Industrial Organization, Cambridge MA, MIT Press.
Wooldridge, J. 2002, Econometric Analysis of Cross Section and Panel Data, Cambridge MA, MIT Press.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Van Meerbeeck, W. Competition and Local Market Conditions on the Belgian Retail Gasoline Market. De Economist 151, 369–388 (2003). https://doi.org/10.1023/B:ECOT.0000006590.66223.9a
Issue Date:
DOI: https://doi.org/10.1023/B:ECOT.0000006590.66223.9a