The impact of major fuel retailers on regional New South Wales petrol prices

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Consumer discontent suggests the lack of competition and the absence of independent retailers in Australian regional centres maintains upward pressure on petrol prices. These claims are examined by estimating a reduced form price model to assess the impact that major retailer market concentration, station density, brand effects and other variables may have on prices. Employing data from the New South Wales government's mandatory FuelCheck reporting system, higher degrees of market concentration and lower station density in regional centres are found to impact prices positively. These findings are robust across data types including: individual station level retail prices, regional averages, retailer margins and alternative Australian Competition and Consumer Commission data. The negative price impacts of introducing an additional non-major retailer are estimated for individual regional centres and on average range from one half to one and half cents per litre depending on fuel type. These estimates appear to be small which, in part, may be the consequence of the sample focus on regional centres only and the introduction of FuelCheck and its objective to improve price transparency in the market.
Original languageEnglish
Pages (from-to)44-59
Number of pages16
JournalEconomic Analysis and Policy
Volume57
Early online dateNov 2017
DOIs
Publication statusPublished - Mar 2018

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Retailers
Wales
Price impact
Market concentration
Reduced form
Price transparency
Government
Margin
Retail prices

Cite this

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title = "The impact of major fuel retailers on regional New South Wales petrol prices",
abstract = "Consumer discontent suggests the lack of competition and the absence of independent retailers in Australian regional centres maintains upward pressure on petrol prices. These claims are examined by estimating a reduced form price model to assess the impact that major retailer market concentration, station density, brand effects and other variables may have on prices. Employing data from the New South Wales government's mandatory FuelCheck reporting system, higher degrees of market concentration and lower station density in regional centres are found to impact prices positively. These findings are robust across data types including: individual station level retail prices, regional averages, retailer margins and alternative Australian Competition and Consumer Commission data. The negative price impacts of introducing an additional non-major retailer are estimated for individual regional centres and on average range from one half to one and half cents per litre depending on fuel type. These estimates appear to be small which, in part, may be the consequence of the sample focus on regional centres only and the introduction of FuelCheck and its objective to improve price transparency in the market.",
keywords = "Market concentration, Petrol prices, Regional markets",
author = "Edward Oczkowski and Alfred Wong and Kishor Sharma",
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The impact of major fuel retailers on regional New South Wales petrol prices. / Oczkowski, Edward; Wong, Alfred; Sharma, Kishor.

In: Economic Analysis and Policy, Vol. 57, 03.2018, p. 44-59.

Research output: Contribution to journalArticle

TY - JOUR

T1 - The impact of major fuel retailers on regional New South Wales petrol prices

AU - Oczkowski, Edward

AU - Wong, Alfred

AU - Sharma, Kishor

N1 - Includes bibliographical references.

PY - 2018/3

Y1 - 2018/3

N2 - Consumer discontent suggests the lack of competition and the absence of independent retailers in Australian regional centres maintains upward pressure on petrol prices. These claims are examined by estimating a reduced form price model to assess the impact that major retailer market concentration, station density, brand effects and other variables may have on prices. Employing data from the New South Wales government's mandatory FuelCheck reporting system, higher degrees of market concentration and lower station density in regional centres are found to impact prices positively. These findings are robust across data types including: individual station level retail prices, regional averages, retailer margins and alternative Australian Competition and Consumer Commission data. The negative price impacts of introducing an additional non-major retailer are estimated for individual regional centres and on average range from one half to one and half cents per litre depending on fuel type. These estimates appear to be small which, in part, may be the consequence of the sample focus on regional centres only and the introduction of FuelCheck and its objective to improve price transparency in the market.

AB - Consumer discontent suggests the lack of competition and the absence of independent retailers in Australian regional centres maintains upward pressure on petrol prices. These claims are examined by estimating a reduced form price model to assess the impact that major retailer market concentration, station density, brand effects and other variables may have on prices. Employing data from the New South Wales government's mandatory FuelCheck reporting system, higher degrees of market concentration and lower station density in regional centres are found to impact prices positively. These findings are robust across data types including: individual station level retail prices, regional averages, retailer margins and alternative Australian Competition and Consumer Commission data. The negative price impacts of introducing an additional non-major retailer are estimated for individual regional centres and on average range from one half to one and half cents per litre depending on fuel type. These estimates appear to be small which, in part, may be the consequence of the sample focus on regional centres only and the introduction of FuelCheck and its objective to improve price transparency in the market.

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