Revisiting Jansen et al.â€™s Modiï¬ed Cournot Model of the European Union Natural Gas Market
AbstractIn this paper we reconsider Jansen et al.â€™s (2012) Cournot model of the European Union natural gas market with three major suppliers Russian Gazprom, Norwegian Statoil, and Algerian Sonatrach. To reï¬‚ect Russiaâ€™s geopolitical consideration, we incorporate a relative market share to Gazpromâ€™s objective function. Compared with Jansen et al.â€™s use of standard market share, our study shows that the introduction of relative market share makes it not only possible to derive the same results in a more general environment, but also permits us to obtain clear-cut quantitative analysis results for equilibrium solution, consumer surplus, and social welfare. Our analysis also demonstrates for this modiï¬ed Cournot model that by seeking a proper market share, Gazprom can achieve the same profits of a Stackelberg leader in a simultaneous move model as in the classical sequential move leader-follower model. When Gazprom pursues the control of market share besides proï¬ts, it will be good news for the EUâ€™s consumers but bad news for its rivals.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 13/12.
Date of creation: Jun 2013
Date of revision:
Contact details of provider:
Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/
More information through EDIRC
Natural gas market; Cournot model; Stackelberg leaderâ€™s advantage; Nonproï¬t incentives; Relative market share; European Union;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
- NEP-CIS-2013-07-05 (Confederation of Independent States)
- NEP-COM-2013-07-05 (Industrial Competition)
- NEP-ENE-2013-07-05 (Energy 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.:
- Finon, Dominique & Locatelli, Catherine, 2008. "Russian and European gas interdependence: Could contractual trade channel geopolitics?," Energy Policy, Elsevier, vol. 36(1), pages 423-442, January.
- Jansen, Thijs & van Lier, Arie & van Witteloostuijn, Arjen, 2007. "A note on strategic delegation: The market share case," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 531-539, June.
- Jansen, Thijs & van Lier, Arie & van Witteloostuijn, Arjen & Boon von Ochssée, Tim, 2012. "A modified Cournot model of the natural gas market in the European Union: Mixed-motives delegation in a politicized environment," Energy Policy, Elsevier, vol. 41(C), pages 280-285.
- Bilgin, Mert, 2009. "Geopolitics of European natural gas demand: Supplies from Russia, Caspian and the Middle East," Energy Policy, Elsevier, vol. 37(11), pages 4482-4492, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson).
If references are entirely missing, you can add them using this form.