Entry Regulation Asymmetries and Petrol Competition in a Mixed Motorway Network

Regulatory and funding asymmetries in the Spanish motorway network produce huge differences in the structure of petrol markets. While competition is encouraged among petrol stations on free motorways, the regulations for toll motorways allow private concessionaires to auction all petrol stations to the same provider, thereby limiting competition and consolidating market power. This paper reports how this regulatory asymmetry results in higher prices and fewer stations. Specifically, we empirically show that competition is constrained on toll motorways by the granting of geographical monopolies. The lack of competition would seem to account for the price differential between toll and free motorways.