Gas release and transport capacity investment as instruments to foster competition in gas markets
Motivated by policy events experienced during the last two decades by the European natural gas industry, this paper develops a simple model for analyzing the interaction between gas release and capacity investment programs as tools to improve the performance of imperfectly competitive markets. We consider a regional market in which a measure that has an incumbent release part of its gas to a marketer complements a program of investment in transport capacity dedicated to imports by the marketer, at a regulated transport charge, of competitively-priced gas. First, we examine the case where transport capacity is regulated while gas release is not, i.e., the volume of gas released is determined by the incumbent. We then analyze the effect of the “artificial” duopoly created by the regulator when the latter regulates both gas release and transport capacity. Finally, using information on the French industry, we calibrate the basic demand and cost elements of the model and perform some simulations of these two scenarios. Besides allowing us to analyze the economic properties of these scenarios, a policy implication that comes out of the empirical analysis is that, when combined with network expansion investments, gas-release measures applied under regulatory control are indeed effective short-term policies for promoting gas-to-gas competition.
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.:
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
- 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.
- Gang Liu, 2004. "Estimating Energy Demand Elasticities for OECD Countries. A Dynamic Panel Data Approach," Discussion Papers 373, Statistics Norway, Research Department.
- Cédric Clastres & Laurent David, 2009. "The impact of asymmetric regulation on surplus and welfare : the case of gas release programmes," Post-Print halshs-00442213, HAL.
- Cédric Clastres & Laurent David, 2009. "The impact of asymmetric regulation on surplus and welfare: the case of gas release programmes," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 33(2), pages 97-110, June.
- Cremer, Helmuth & Laffont, Jean-Jacques, 2002. "Competition in gas markets," European Economic Review, Elsevier, vol. 46(4-5), pages 928-935, May.
- repec:dau:papers:123456789/11509 is not listed on IDEAS
- Gasmi, Farid & Oviedo, Juan Daniel, 2010. "Investment in transport infrastructure, regulation, and gas-gas competition," Energy Economics, Elsevier, vol. 32(3), pages 726-736, May.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:34:y:2012:i:5:p:1251-1258. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.