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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.

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  • 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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    1. Bovenberg, A. L. & van der Ploeg, F., 1994. "Environmental policy, public finance and the labour market in a second-best world," Journal of Public Economics, Elsevier, vol. 55(3), pages 349-390, November.
    2. Green, Jerry & Sheshinski, Eytan, 1976. "Direct versus Indirect Remedies for Externalities," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 797-808, August.
    3. Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521265638, March.
    4. Wijkander, Hans, 1985. "Correcting externalities through taxes on/subsidies to related goods," Journal of Public Economics, Elsevier, vol. 28(1), pages 111-125, October.
    5. Cremer, Helmuth & Gahvari, Firouz & Ladoux, Norbert, 1998. "Externalities and optimal taxation," Journal of Public Economics, Elsevier, vol. 70(3), pages 343-364, December.
    6. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
    7. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
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