The average-cost explanation for margin differences appears to be consistent with the
data after 1986, when the margin differences narrowed as the regular leaded share of sales
in the market fell. From 1986 to 1989, however, the proportion of stations carrying leaded
gasoline declined and the volume per station that carried the fuel may have increased or
decreased. The data prior to 1986, when all stations carried leaded gasoline and volume per
station was clearly declining, are not consistent with this explanation. Furthermore, in its
simple form, this average cost explanation would dictate that the margin on the lower volume
type of fuel would exceed the margin on the more popular fuel when all stations
carry both fuel. Yet even as the leaded share of gasoline sales fell to 34% in the beginning
of 1986, its average margin was still below that of unleaded regular, with a market share
of 51%.