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Competitive Effects of Entry in Gasoline Markets

Lucas W. Davis et al.

The Journal of Industrial Economics2025https://doi.org/10.1111/joie.12418article
AJG 3ABDC A*
Weight
0.37

Abstract

We use panel data on the location, prices, and quality of the universe of gas stations in Mexico to study the competitive effects of entry on incumbent firms. Using more than 1000 entry events and defining local markets based on the road network, we find that the entry of a new station within 3 min driving time decreases regular gasoline prices by 6% of the retail price spread. Competitive effects decline with travel time and are largest in markets that previously had only one station. Entry of stations with the same owner as the incumbent has near‐zero effects. The effect of competition on quality is less clear, with suggestive evidence of improved service quality in some specifications.

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https://doi.org/https://doi.org/10.1111/joie.12418

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@article{lucas2025,
  title        = {{Competitive Effects of Entry in Gasoline Markets}},
  author       = {Lucas W. Davis et al.},
  journal      = {The Journal of Industrial Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/joie.12418},
}

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Competitive Effects of Entry in Gasoline Markets

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.