Working Paper: NBER ID: w24547
Authors: Lucas W. Davis; Shaun McRae; Enrique Seira Bejarano
Abstract: Retail petroleum markets in Mexico are on the cusp of a historic deregulation. For decades, all 11,000 gasoline stations nationwide have carried the brand of the state-owned petroleum company Pemex and sold Pemex gasoline at federally regulated retail prices. This industry structure is changing, however, as part of Mexico's broader energy reforms aimed at increasing private investment. Since April 2016, independent companies can import, transport, store, distribute, and sell gasoline and diesel. In this paper, we provide an economic perspective on Mexico's nascent deregulation. Although in many ways the reforms are unprecedented, we argue that past experiences in other markets give important clues about what to expect, as well as about potential pitfalls. Turning Mexico's retail petroleum sector into a competitive market will not be easy, but the deregulation has enormous potential to increase efficiency and, eventually, to reduce prices.
Keywords: No keywords provided
JEL Codes: L11; L51; Q31; Q48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Deregulation (L51) | Increased price competition (D49) |
| Increased price competition (D49) | Lower prices for consumers (D49) |
| Deregulation (L51) | Lower prices for consumers (D49) |
| Introduction of independent companies (L19) | Enhanced efficiency in the market (G14) |
| Deregulation (L51) | Complex market transformation (D40) |
| Deregulation (L51) | Potential pitfalls (collusion, market power) (D43) |