Competition, regulation, and pricing behavior in the Spanish retail gasoline market

The restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990 the Spanish government introduced a system of ceiling price regulation in order to ensure that "liberalization" was accompanied by adequate consumer protection. This paper examines the pricing behavior of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases and decreases in the spot price of gasoline. However, one the ceiling price regulation was abolished, the "collaboration" between the government and the major operators, Repsol-YPF and Cepsa-Elf in order to control the inflation rate results in a slower rate of increase (decrease) of gasoline retail prices when gasoline spot prices went up (went down) than elsewhere in the European Union. Finally, retail margins were by the end of our timing period of analysis, as in the first years after the abolishment of the state monopoly, well above the European ones.regulation, pricing behavior, competition, gasoline market

Competition, regulation, and pricing behavior in the Spanish retail gasoline market

The restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990 the Spanish government introduced a system of ceiling price regulation in order to ensure that "liberalization" was accompanied by adequate consumer protection. This paper examines the pricing behavior of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases and decreases in the spot price of gasoline. However, one the ceiling price regulation was abolished, the "collaboration" between the government and the major operators, Repsol-YPF and Cepsa-Elf in order to control the inflation rate results in a slower rate of increase (decrease) of gasoline retail prices when gasoline spot prices went up (went down) than elsewhere in the European Union. Finally, retail margins were by the end of our timing period of analysis, as in the first years after the abolishment of the state monopoly, well above the European ones.Ignacio Contín-Pilart gratefully acknowledges financial support from the Spanish Ministry of Education project SEJ2004-07242-C03-02

Cost recovery in the water supply and sanitation sector: A case of competing policy objectives?

According to Article 9 of the European Water Framework Directive, water-pricing policies have to provide adequate incentives for users to use water resources efficiently by 2010. In this paper, we investigate some of the conflicts that may arise when introducing the polluter pays principle for the recovery of costs of water supply and sanitation services. We argue that conceptually, there are no a priori reasons to question the co-existence of the polluter pays principle with other principles of environmental policy, although the latter do influence its practical implementation. There also seem to be no major formal conflicts with the rules that govern services of economic interest. This, however, does not mean that it is easy to implement the polluter pays principle in the water sector. Rather, it is a consequence of the fact that the Water Framework Directive does not reflect a strong commitment to a very stringent implementation of the principle that the polluter should pay. This does not imply that the ideas that lie behind the polluter pays principle should therefore be abandoned, but the neoclassical motive of cost-efficiency might not be the main argument to recommend its use in the context of water supply and sanitation services.

Competition, regulation, and pricing behaviour in the Spanish retail gasoline market

The restructuring of the Spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market. In June 1990, the Spanish government introduced a system of ceiling price regulation in order to ensure that "liberalization" was accompanied by adequate consumer protection. By 1998, prices were left to the "free" market. This paper examines the pricing behaviour of the retail gasoline market using multivariate error correction models over the period January 1993 (abolishment of the state monopoly)-December 2004. The results suggest that gasoline retail prices respond symmetrically to increases as well as to decreases in the spot price of gasoline both over the period of price regulation (January 1993-September 1998) and over the period of free market (October 1998-December 2004). However, once the ceiling price regulation was abolished, cooperation emerged between the government and the major operators, Repsol-YPF and Cepsa-Elf, to control the inflation rate. This resulted in a slower rate of adjustment of gasoline retail prices when gasoline spot prices went up, as compared with the European pattern. Finally, the Spanish retail margin was by the end of our timing period of analysis, as in the starting years after the abolishment of the state monopoly, above the European average. This pattern confirms our political economic hypothesis, which suggests that the Spanish government and the oil companies were working together in reducing the inflation, in periods of rising oil and gasoline prices. It is also inferred that explaining the pricing pattern in energy markets may require different hypothesis than the classical perspective, involving just firms taking advantage of market power.Competition Regulation Spanish gasoline market