Strategic Storage and Competition in European Gas Markets
AbstractIn this paper, we study how competition on downstream gas markets is influenced by sourcing decisions in the supply chain. We analyze the sequential relationships between storage decisions and intermediate pricing in spot markets. We show that an upstream leadership in the access to storage facilities leads a dominant firm to adopt strategic storage decision. This strategy consists in stockpiling more than supplied in the downstream market. This behavior is a part of a raising rival's cost strategy for the leader. Furthermore in some cases, optimal regulation of gas storage access may not prevent such a behavior.
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Bibliographic InfoPaper provided by LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1 in its series Cahiers du LASER (LASER Working Papers) with number 2008.24.
Length: 23 pages
Date of creation: 2008
Date of revision:
Contact details of provider:
Postal: Université de Montpellier 1, Faculté des Sciences Economiques, LASER, Rue Raymond Dugrand - Espace Richter, CS 79606, 34960 Montpellier Cedex 2, France
Web page: http://www.laser.univ-montp1.fr
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Storage; spot market; gas markets; regulation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-14 (All new papers)
- NEP-BEC-2009-02-14 (Business Economics)
- NEP-COM-2009-02-14 (Industrial Competition)
- NEP-CSE-2009-02-14 (Economics of Strategic Management)
- NEP-EEC-2009-02-14 (European Economics)
- NEP-MIC-2009-02-14 (Microeconomics)
- NEP-REG-2009-02-14 (Regulation)
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