Brad DeLong presents his argument for why the minimum gas price laws are silly. Pretty much what we covered… if the market were hard to enter, it would maybe make sense. I wonder if the market is less contestable with different ownership distribution (i.e. if the oil industry were consolidated in ways like the Standard Oil of old)?

You can claim that minimum-gasoline-price laws are good because independent gas station owners are morally worthy people, the salt of the earth, the backbone of America, and they deserve to have the power of the state deployed to protect them and their livelihoods against the amoral efficiency calculus of the market. I will laugh at you if you do, but you can make that claim. You cannot make the uninformed and ignorant claim that minimum-gasoline-price laws actually lower the long-run price of gasoline by “protecting” us from rampant monopoly–unless you have some reason to believe that gas stations are not part of a contestable market.

Well worth reading the entire thing.

Update: I would also read the comments if you’re truly interested in more on this topic. Some folks point out different factors that affect how contestable the gas market is. I think the simple conclusion is that price controls in general are not good. That’s pretty much all that seems clear to me… someone points out that Target is based in MN, and they may object to Walmart using gas stations as a loss leader to draw more shoppers. Also, another commenter pointed out that minimum markups are the least intrusive price control. Interesting debate.

Update #2: Fixed the link. Sorry!