Thursday, July 24, 2014

rural gasoline, anti-trust, and health care/insurance

*Very* interesting: a rural county worried about a cartel at the gas station level, opening up its own store to compete...

If they're not losing any money on it, this would be a really cool approach to anti-trust concerns-- at least on paper. (Are they losing money? It'd be hard to measure, given the layers of bureaucracy-- and given that we're talking about the government, it'd be naïve not to have doubts!)

There may be an implicit cartel, where the stores offer higher-quality gasoline or have moved into offering other services that are costly but convenient (e.g., food). And there may be a market for low-frills gas-only services. (That said, my understanding is that they make good money on the other services and wouldn't need to bid up the price for their gas to cover costs.) Does that explain the lower prices at Swifty?

One other connection: This is one of the rationales for ObamaCare-- that the government can provide another choice. At least two problems with the comparison: 1.) Selling gas is a lot easier than manipulating the market for health care and health insurance! 2.) Government is largely responsible for the distortions in health care and esp. health insurance. So, the government has caused the problem that it is unlikely to fix with its remedy.


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