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Regional finance and competition policy: the Canary Islands petrol market

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Abstract:

Market competition levels affect all agents of an economy: businesses, consumers and the State. Traditional analysis has evaluated the State's effects on the other agents, but no analysis has been conducted regarding the inverse relationship. Thus, the aim of this study is to estimate the tributary income losses that low levels of competition in the retail petrol market could cause in it, using the data from Canary Islands Autonomous Community. First, we will use Parker and Roller's methodology (1997) to measure the level of competition and confirm a deficiency. Then, using estimated rates, we will determine the differences that would appear in tributary income if the market were to behave as a Cournot's model. Our results show that the lack of competition causes a substantial loss of tributary income for this region, somewhere between 5and 10% of the real income from the tax on unleaded petrol for the year 2004.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701721224

Affiliations: 1: Departamento de Analisis Economico Aplicado. Grupo de Economia de las Infraestructuras y el Transporte, Universidad de Las Palmas de Gran Canaria, Las Palmas, Espana 2: Departamento de Politica Economica, Grup de Recerca en Politicas Publicas i Regulacio Economica, Institut de Recerca en Economia Aplicada (IREA), Barcelona, Espana

Publication date: April 1, 2010

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