Journal of Industrial and Business Economics

, Volume 46, Issue 4, pp 459–498 | Cite as

Regulatory capture in the US petroleum refining industry

  • Robert GmeinerEmail author


The capture theory of regulation concludes that regulatory agencies tend to be captured by the firms they are regulating. This paper tests the capture theory in the recent environment of nuanced agency regulation by the administrative state, focusing on the US oil refining industry. Regulation has tended to narrow refiners’ margins, which harms nonintegrated oil refiners more than vertically integrated. Providing evidence of regulatory capture, complementary analysis of stock returns shows that regulations have benefited the stocks of vertically integrated firms. The narrowing of the margins is primarily due to rising input costs.


Regulation Crack spreads Vertical integration Rent seeking 

JEL Classification

D72 K23 L71 


Compliance with ethical standards

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.


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Copyright information

© Associazione Amici di Economia e Politica Industriale 2019

Authors and Affiliations

  1. 1.Kennesaw State UniversityKennesawUSA

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