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Tuesday, April 12, 2005

Do we need a minimum-price law for gasoline?

Minnesota passed a law in 2001 to put a price floor on gasoline. Independent station owners were complaining about large chains coming in and undercutting prices to put them out of business. It's the Wal-Mart effect in the gas station industry, to put it one way. With prices so high right now, though, some people want to repeal the law.

I don't know what to think of this. I think that in some markets, this is an example of how we need to regulate the free market. After all, in some places, there aren't many choices when it comes to gas, and if Wal-Mart or some other big chain comes in and sells gas below cost to drive everybody out, when they are the only game in town they will have a monopoly. In urban areas, though, this is less likely to happen. Having different laws for urban areas and rural areas doesn't sound like a good idea, though. Then there is the question of whether lower prices are better in the long run anyway, considering our over-reliance on oil.

It's unlikely that a repeal will be passed, but this is one of those unintended consequences that laws sometimes have when circumstances change.

4 Comments:

At 8:11 PM, April 18, 2006, Anonymous Anonymous said...

God forbid we have the Walmart effect in the service station industry. Big bad Walmart, forcing delivery and pricing effeciency into a market that is consuming an ever increasing amount of Minnesotan's budget would be just awful.

Allowing free market competition to drive lower prices and requiring a company's ability to innovate and compete determine if it stays in business? How totally un-American!

Haven't these people who want to get rid of minimum pricing laws studied the great American tradition of socialism?

 
At 12:29 PM, July 05, 2010, Anonymous viagra online said...

Of course we don't, What we really need is a maximum-price law for gasoline. It will be really useful, and it'll help poor people too much.

 
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