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 ﬁrmâs 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 regulatorâs taking account of the ﬁrmâs 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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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, 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 010073, UNIVERSIDAD DEL ROSARIO.
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