Does Common Ownership Cause Higher Prices? Evidence from Retail Gasoline Markets

Abstract The ownership of competing firms by investment funds, or common ownership, can cause anti-competitive product market outcomes. This paper examines the price effects of common ownership in the Western Australian (WA) retail gasoline market. Using a rich data set of daily, station-level petrol prices, I exploit the acquisition of Puma Energy by Chevron which delivered a significant shock to common ownership in the market. Through a difference-in-differences framework, I estimate that prices increased by 1.54 cents per litre on average at BP stations that had increased common ownership relative to unaffected BP stations, representing a 20% increase in margins. JEL classification: G23, G34, L13, L22, L41, Q41.