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The export of Russian gas to Europe: breaking up the monopoly of Gazprom

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    Abstract

    Having exports from more than one Russian gas producer has been an important issue in the Russian–EU energy dialogue during the last decade. Nevertheless, in June 2006, Russian Federal law legalized the de facto export monopoly of Gazprom. Political and commercial interests have regularly explained the Russian strategy for the European gas market. However, it is important that economic efficiency is also taken into account. Economists often evaluate the efficiency of a policy through its effect on national welfare. In this paper, I examine both theoretically and numerically whether a liberalization of Russian gas exports would increase Russian national welfare, given that the Russian domestic market is already deregulated. The results of the paper show that the dominant position of Gazprom in the Russian gas industry might stimulate the government to support Gazprom's export monopoly. The market share of independent producers in the Russian gas market would have to be significantly increased for Russian export liberalization to be welfare enhancing.

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    Bibliographic Info

    Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 494.

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    Date of creation: Feb 2007
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    Handle: RePEc:ssb:dispap:494

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    Keywords: Russia; Natural gas; export; monopoly; national welfare;

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    1. Golombec, R. & Gjelsvik, E. & Knut, E. & Rosendahl, E., 1996. "Increased Competition on the Supply Side on the Western European Natural Gas Merket," Memorandum 11/1996, Oslo University, Department of Economics.
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    7. Eirik Lund Sagen & Marina Tsygankova, 2006. "Russian Natural Gas Exports to Europe: Effects of Russian Gas Market Reforms and the Rising Market Power of Gazprom," Discussion Papers of DIW Berlin 597, DIW Berlin, German Institute for Economic Research.
    8. David G. Tarr & Peter D. Thomson, 2004. "The Merits of Dual Pricing of Russian Natural Gas," The World Economy, Wiley Blackwell, vol. 27(8), pages 1173-1194, 08.
    9. Sorgard, Lars, 1997. "Domestic merger policy in an international oligopoly: The Nordic market for electricity," Energy Economics, Elsevier, vol. 19(2), pages 239-253, May.
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    Cited by:
    1. Marina Tsygankova, 2007. "When is Mighty Gazprom Good for Russia?," Discussion Papers 526, Research Department of Statistics Norway.

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