Until the early 1970s, before the gas crises and shortages, gas prices were not usually

displayed in front of a gas station. This changed during the Ford Administration. Imagine that

several gas stations are located near each other, over an area of two city blocks.

a. Of the models discussed in Chapter 13, which one most closely applies to gasoline

shopping in the time period up until the early 1970s? Explain.

b. Based on your answer in part (a) above, what would you expect to happen to gas prices if

cities required gas prices to be publicly viewable from the street? Explain by specific

reference to your selected economic model.

Book: Modern Industrial Organization by Carlton and Perloff, 4th Edition