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Pricing Liquid Petroleum Gas in Mexico

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  • Dagobert L. Brito
  • William Laney Littlejohn
  • Juan Rosellón

Abstract

This paper considers the regulation of pricing of liquid petroleum gas in Mexico. We construct a model that incorporates all information essential to the pricing question and derive relationships that should hold between prices in Mexico and prices in world markets. Prices in Mexico can be tied to the readily observable prices in the United States by a netback rule. However, this rule can lead to incentives to increase the price of domestic liquid petroleum gas by diverting production from the regulated market.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 66 (2000)
Issue (Month): 3 (January)
Pages: 742-753

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Handle: RePEc:sej:ancoec:v:66:3:y:2000:p:742-753

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Web page: http://www.southerneconomic.org/
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Cited by:
  1. Juan Rosellón & Dagobert L. Brito, 2008. "Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of The Second Best," Working papers DTE 426, CIDE, División de Economía.
  2. Brito, Dagobert & Rosellon, Juan, 2004. "Implications Of The Elasticity Of Natural Gas In Mexico On Investment In Gas Pipelines And In Setting The Arbitrage Point," MPRA Paper 54115, University Library of Munich, Germany.
  3. Brito, Dagobert & Rosellón, Juan, 2002. "Timing of Investment in LPG Pipelines in Mexico," MPRA Paper 54116, University Library of Munich, Germany.
  4. Rosellon, Juan, 2008. "Policy Research Supporting Policy Making: The CIDE-CRE Agreement," MPRA Paper 22419, University Library of Munich, Germany.
  5. Ramirez, Jose Carlos & Rosellon, Juan, 2002. "Pricing natural gas distribution in Mexico," Energy Economics, Elsevier, vol. 24(3), pages 231-248, May.

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