Flex cars and competition in ethanol and gasoline retail markets

Assuncao, Juliano, Cordeiro De Noronha Pessoa, Joao Paulo and Rezende, Leonardo (2013) Flex cars and competition in ethanol and gasoline retail markets. CEP Discussion Papers (CEPDP1251). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

In Brazil, gasoline and ethanol coexist as automotive fuels and are becoming closer substitutes as flex cars become more widely adopted. We employ this source of variation in a large panel of weekly prices at the station level to show that fuel prices have fallen in response to this change. This finding is evidence of market power in fuel retail and indicates that innovations that increase consumer choice benefit even those who choose not to adopt them. We also propose a model of price competition in this market and use it to estimate demand from price response functions.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2013 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HE Transportation and Communications
JEL classification:	L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets L - Industrial Organization > L6 - Industry Studies: Manufacturing > L62 - Automobiles; Other Transportation Equipment L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L71 - Mining, Extraction, and Refining: Hydrocarbon Fuels
Date Deposited:	22 Feb 2024 11:00
Last Modified:	22 Feb 2024 11:00
URI:	http://eprints.lse.ac.uk/id/eprint/121791

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