Who Owned Georgia English.pdf

A GEORGIAN GASOLINE CARTELI pull into the gas station and tell a guy in a blue uniformto fill it up with premium, which will cost about 100 lari. Thestation is clean and tidy and I can pay with my bank card, even inthe west Georgian town of Samtredia. As he fills my tank, I recallthe private village “gas stations” of yestermonth across Georgia,where you’d find plastic Borjomi bottles full of petrol on a ricketytable in front of a random house. That, I always maintained,represented the essence of a truly free market.Before the Rose Revolution, dozens of companies operatedin the retail fuel market. We could buy decent gas, bad gas andblack market gas. After the Rose Revolution, the governmenteffectively eliminated the black market retailers as newcompanies emerged and began to consolidate their presence. Oneby one, independent gas stations were swallowed up by biggerfish. Now, only 5 suppliers operate on the Georgian market.For liberal economists, this is a textbook example of how a freemarket and open competition is supposed to work. The problemis that the fewer players there are in the market and the higherdegree of market concentration there is, the higher the likelihoodof cartel-type agreements and concerted practice there is. 177 Ifone liter of gasoline is 2.50 GEL at Gulf, you can bet it will prettymuch be the same price at Wissol, Lukoil, Rompetroland Socar.We live in a bubble here in Georgia. We grumble about therising prices of gasoline and suppose that it’s the way of the world,177 Limited number of economic agents operating on the relevant marketincreases the likelihood of anti-competitive behavior – collusive (cartel)agreements and concerted practice – due to the following reasons:1. Limited number of economic agents makes it relatively easy to reach anagreement on the terms of a collusive agreement;2. Limited number of the participants of a collusive agreement makes it easier tomonitor the terms of the agreement;3.When the number of economic agents increases, each of them gets a smallershare of the market. This increases the possibility of violating the terms of thecollusive agreement and getting a benefit, which makes it more difficult tofulfill the terms of the collusive agreement.Tirole J.; The Theory of Industrial Organization, 1988, MIT Press, MA.43