Competition Buzz: Drawing a Roadmap for Oil Pricing Reform

Competition Policy International is committed to both the creation of new knowledge and to the preservation of the valuable lessons accumulated through years of antitrust experience, thought, experiments and the valuable lessons of errors. As the world enters a new, volatile stage in the global oil markets, we bring back an insightful analysis which may inform the current debate.

In 2011, the median oil imports rose to 5 percent of gross domestic product for net importers. In the past several years, many governments have not passed through the world oil price increases to consumers fully. As a sign of divergent pricing policies, the retail prices of gasoline, diesel, and cooking gas in January 2013 varied by a factor of 190, 250, and 70, respectively, across developing countries. Policies to keep oil product prices low to benefit the economy and protect the poor have had a number of unintended negative consequences, including flourishing corruption in the oil sector and entrenchment of monopoly operators or inefficient firms through which subsidies are channeled, stifling competition and raising costs.

Full content: SSRN

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