Market Effects of Regulatory Heterogeneity: A Study of Regional Gasoline Content Regulations.

The Clean Air Act Amendments of 1990 and subsequent state-level environmental regulations specify regional content criteria that gasoline must meet prior to retail sale. Since the early 1990’s, the regulations have created fifteen unique blends of gasoline for use in different locations. Allowing gasoline content to vary by jurisdiction allows regulators to more efficiently address local air emission problems. However, increasing the number of blends of gasoline imposes additional refining, transportation and storage costs. This paper surveys the tradeoff between the benefits of allowing heterogeneous regulation of content and the potential market impacts of increasing the number of blends of gasoline.