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How much do the neighbors pay? Economic costs of international gas disputes

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  • Olha Zadorozhna

Abstract

The paper analyzes financial performance of European companies during Ukrainian-Russian gas disputes in January 2006 and 2009. Investors' reaction to the gas disputes is estimated for companies listed on the European stock exchanges and for which natural gas is the main factor of production. Economic costs of the gas cut-offs are estimated using event study methodology. It is found that the most severe decline in value due to the gas disputes was for companies located in the CEE states that are heavily dependent on Russian gas supply. The paper also contributes to the literature on the bargaining power of states, providing an empirical investigation of how much costs bears a party with less bargaining power in the dispute.

Suggested Citation

  • Olha Zadorozhna, 2012. "How much do the neighbors pay? Economic costs of international gas disputes," IEFE Working Papers 48, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    • Handle: RePEc:bcu:iefewp:iefewp48
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    File URL: https://repec.unibocconi.it/iefe/bcu/papers/iefewp48.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Natural gas; gas dispute; security of supply; bargaining power; CEE; EU;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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