Investment in transport capacity and regulation of regional monopolies in natural gas commodity markets
AbstractThis paper develops a model of the regulator-regulated ﬁrm relationship in a regional natural gas commodity market which can be linked to a competitive market by a pipeline. We characterize normative policies under which the regulator, in addition to setting the level of the capacity of the pipeline, regulates the price of gas, under asymmetric information on the ﬁrmÂ´s technology, and may (or may not) operate (two-way) transfers between consumers and the ﬁrm. We then focus on capacity and investigate how its level responds to the regulatorÂ´s taking account of the ﬁrmÂ´s incentive compatibility constraints. The analysis yields some insights on the role that transport capacity investments may play as an instrument to improve the eﬃciency of geographically isolated markets.
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Bibliographic InfoPaper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 010074.
Date of creation: 29 Oct 2012
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Natural gas; Regulation; Transport capacity.;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-CTA-2012-11-11 (Contract Theory & Applications)
- NEP-ENE-2012-11-11 (Energy Economics)
- NEP-REG-2012-11-11 (Regulation)
- NEP-TRE-2012-11-11 (Transport Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cremer, Helmuth & Gasmi, Farid & Laffont, Jean-Jacques, 2003. "Access to Pipelines in Competitive Gas Markets," Journal of Regulatory Economics, Springer, Springer, vol. 24(1), pages 5-33, July.
- Farid Gasmi & Juan Daniel Oviedo, 2012. "Controlling regional monopolies in the natural gas industry: the role of transport capacity," DOCUMENTOS DE TRABAJO, UNIVERSIDAD DEL ROSARIO 010073, UNIVERSIDAD DEL ROSARIO.
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