No formal model, mostly common sense.
Do you believe that California paying $0.80 higher for gas than anywhere else in the country is due to free market forces?
Yes, California has higher taxes and California requires a different / specific blend to meet CARB.
To improve air quality, the state limits the type of gasoline to a specially formulated blend commonly known as CARBOB. The blend, too expensive for most outside producers to make and deliver, is largely created within the state.
So, yes the higher price in CA is exactly due to free market. Fewer refineries make a CA specific blend, less supply, more demand = higher price. As an FYI, the $0.80 delta was in 2015... current delta from the national average is $0.60. Right there is market action changing the price
