Exploring the Structure and Performance of Petroleum Retail Outlets in Pakistan

2016:145
JEL Classification : D24, L81, R30
Publication Year : 2016

Retail petroleum business is an important sector of any economy, but the analysis of its structure and performance has hitherto been missing in Pakistan. This paper is first such attempt using primary survey data for Pakistan. The results obtained from the petrol pumps included in our sample indicate that the petrol pumps make handsome profits. The petrol pumps in urban regions as well as those on highways have higher sales and earn higher gross profits, indicating that location od a petrol pump is an important determinant of a petrol pump’s sales performance. Another locational variable that is statistically significant in contributing to higher sales and gross profits is the distance of the petrol pump from the nearest petrol pump. Size is one of the most important variables having a positive impact on the total sale volumes and gross profits of petrol pumps. As far as spatial differentiation is concerned, there is a non-linear relationship between the performance of the petrol pumps and the distance from their competitors.