Antitrust and Sales-Below-Cost Laws: The Case of Retail Gasoline

Numerous states have sales-below-cost (SBC) laws, often directed at specific products such as gasoline. Potential violations of state SBC laws occur when prices are less than the seller's cost of doing business, or some proxy thereof. The most commonly stated purpose of these laws is to protect small independent firms from predation by larger firms. This study offers empirical evidence on the impact of SBC laws on the retail gasoline market. The result indicate that SBC laws directed specifically at the retail gasoline market have resulted in higher retail margins.