Choice of Organisational Form in Petrol Retailing: An Economic Analysis

Abstract

This paper is concerned with the reasons for vertical integration. It specifically addresses the questions of why vertical integration and close contractual equivalents have arisen in the petrol sector of the UK and what influences the particular pattern of integration and contracts found. The paper reports the results of a case study based on 17 semi-structured interviews. The main conclusions of the paper are as follows. The recent history of vertical integration is better accounted for by efficiency rationales. The explanation of the nature of contracts used emerges as being a mixture of agency factors and those emphasised by transaction cost economics. It is argued that the mix of contracts used is principally explained vy agency theory.