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The Secondary Market for Capacity in Natural Gas Transportation


  • Rigoberto Ariel Yépez



The purpose of this paper is to consider the problem of allocating the costs of a public facility with large fixed costs and increasing returns to scale. A particular case is considered for the natural gas transportation industry. A model for allocating capacity over time is considered. The approach is to find optimal pricing so that social welfare is maximized while the common facility is efficiently used. If individuals have property rights to the capacity of the common facility, the result of the analysis leads to the existence of market-clearing prices through a secondary market for the capacity of the common facility.

Suggested Citation

  • Rigoberto Ariel Yépez, 2001. "The Secondary Market for Capacity in Natural Gas Transportation," Economía Mexicana NUEVA ÉPOCA, , vol. 0(1), pages 107-119, January-J.
  • Handle: RePEc:emc:ecomex:v:10:y:2001:i:1:p:107-119

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