Price and Rate Regulations for the Mexican Natural Gas Industry: Comments on Policy Decisions
After the regulatory reform experienced in the Mexican gas sector, three areas with market power remained. Production is a legal monopoly of Pemex. Transportation and distribution are natural monopolies. Distributor’s gas sales to (mainly residential) customers are potentially monopolistic in case of lack of competition from marketers or substitute fuels. This paper presents the theoretical concepts and international lessons considered during the design of the price and rate regulations to limit these areas of market power. Benchmarking is used to control Pemex gas prices, while a sophisticated revenue cap methodology is employed to regulate transportation and distribution rates. All of these mechanisms provide incentives for productive efficiency, take care of allocative efficiency, and minimize the cost of regulation. The paper also points out lessons from the policy design process and some of the potential pitfalls of regulations as well.
Volume (Year): VII (1998)
Issue (Month): 2 (July-December)
|Contact details of provider:|
When requesting a correction, please mention this item's handle: RePEc:emc:ecomex:v:7:y:1998:i:2:p:267-308. 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: (Ricardo Tiscareño)
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.