New evidence on price discrimination and retail configuration

Abstract

In a frequently cited paper in the industrial organization literature, Shepard examines the extent to which gasoline stations can price discriminate by offering both selfand full-service gasoline rather than offering only a single service choice. Given the idiosyncratic nature of the data used in Shepard's original study and the recommendations of the author, this issue is re-examined using a larger and richer data set with a more typical smaller proportion of full-service-only stations. Using a panel of station-level data from the Los Angeles retail gasoline market from 1992'1995, Shepard's original findings are confirmed.