Market Concentration In California

Gasoline markets are generally more concentrated in the West than on the East Coast.  Table B.1 shows two measures of concentration for California and PADD 1.  The first is the aggregate market share of reformulated gasoline sales for the top five market share holders.  The second is the Herfindahl-Hirschman Index (HHI) for all gasoline sales.  This index gives higher weighting to large-share companies.  It is used by the Antitrust Division of the Department of Justice (DOJ) and Federal Trade Commission (FTC) as a guide when considering proposals for horizontal mergers.  It can go from near zero, in perfect competition, to 10,000, which is a monopoly.  According the DOJ/FTC guidelines, an HHI index below 1,000 indicates the market is unconcentrated.  An index of from 1,000 to 1,800 indicates moderate concentration.  Above 1,800 indicates high concentration.  This table shows that California is not highly concentrated.