American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
The Inner Workings of a Hub-and-Spoke Cartel in the Automotive Fuel Industry
American Economic Journal: Microeconomics
vol. 17,
no. 1, February 2025
(pp. 41–65)
Abstract
We study the inner workings of a hub-and-spoke cartel in the Brazilian automotive fuel industry. Based on court documents and detailed price and sales data, we discuss how gas station owners (spokes) operating inside the federal capital received help from fuel distributors (hub) to reduce dispersion of and increase gasoline's retail price. We provide evidence that distributor cartel members benefited by raising wholesale prices while keeping competitors from supplying retail cartel members. We also provide theoretical foundations and empirical evidence for a new mechanism through which hubs help spokes: smoothing cost fluctuations.Citation
Chaves, Daniel, and Marco Duarte. 2025. "The Inner Workings of a Hub-and-Spoke Cartel in the Automotive Fuel Industry." American Economic Journal: Microeconomics 17 (1): 41–65. DOI: 10.1257/mic.20210250Additional Materials
JEL Classification
- K21 Antitrust Law
- L12 Monopoly; Monopolization Strategies
- L22 Firm Organization and Market Structure
- L32 Public Enterprises; Public-Private Enterprises
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
- L81 Retail and Wholesale Trade; e-Commerce
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
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