New Publication in Journal of Industrial Economics
TI fellow Adriaan Soetevent published a new article in the Journal of Industrial Economics. Soetevent with co authors Marco Haan and Pim Heijnen evaluated a policy experiment of the Dutch government who organized auctions to redistribute tenancy rights for highway gasoline stations. The authors concluded that the auctioning of licenses without an obligation to divest has no discernible effect on prices.
Abstract
To foster competition, governments can intervene by auctioning licenses to operate, or by imposing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for highway gasoline stations and imposing divestitures of such stations on the four major companies. We evaluate this policy experiment and find that the auctioning of licenses without an obligation to divest has no discernible effect on prices. An obligation to divest lowers prices by 1.3–2.3% at divested sites. Moreover, prices decrease by 0.9–1.2% at sites nearby. This suggests that the observed price decreases are at least partly due to competitive spillovers.
Full citation of the article: Adriaan R. Soetevent, Marco A. Haan and Pim Heijnen, Do Auctions and Forced Divestitures Increase Competition? Evidence for Retail Gasoline Markets, The Journal of Industrial Economics Volume 62, Issue 3, pages 467–502, September 2014. DOI: 10.1111/joie.12054