Abstract Although competition law generally grants dealers operating under vertical agreements the freedom to set retail prices, the theoretical literature has questioned whether such formal discretion benefits consumers in the presence of exclusivity, which may facilitate tacit coordination with upstream suppliers. This paper contributes empirical evidence on this issue using data from the Spanish transport fuel market, where national regulation—complementing the European framework—explicitly prohibits supplier companies from imposing vertical price restraints. For both gasoline and diesel, and across several time horizons, dealer-operated stations consistently display short-run price adjustments that differ from their company-operated counterparts. This divergence suggests that dealer-operated stations exercise a degree of pricing discretion. However, our evidence further indicates that this discretion does not translate into lower average retail prices relative to company-operated stations. The results are consistent with theoretical predictions and suggest that, under commonly used exclusive dealing arrangements, prohibitions on clauses such as minimum resale prices may have more nuanced effects than commonly assumed in regulatory frameworks.
Balaguer et al. (Thu,) studied this question.
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