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Reforms in the natural gas sector and economic development

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  • Delalibera, Bruno R.
  • Serrano-Quintero, Rafael
  • Zimmermann, Guilherme G.

Abstract

This paper investigates the short- and long-term effects of increased competition in the provision of natural gas. We build a dynamic general equilibrium model with monopolistic distribution of natural gas and calibrate it to 12 major Brazilian local distribution companies. We find that reductions in the price of natural gas can lead to sustained and significant increases of natural gas in the energy mix. A 5% reduction in the price of natural gas leads to a median increase in the consumption of natural gas of 5.5%, with moderate GDP gains between 0.03% and 0.16%. Our model not only highlights the mechanisms for energy transitions but also shows that moderate declines in natural gas prices can lead to sustained long-term increases in the share of natural gas consumption.

Suggested Citation

  • Delalibera, Bruno R. & Serrano-Quintero, Rafael & Zimmermann, Guilherme G., 2023. "Reforms in the natural gas sector and economic development," Economic Modelling, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:ecmode:v:125:y:2023:i:c:s0264999323001700
    DOI: 10.1016/j.econmod.2023.106358
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    More about this item

    Keywords

    Energy economics; Natural gas industry; Regional development;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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