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Pricing Liquid Petroleum Gas in Mexico

Author

Listed:
  • Dagobert L. Brito
  • William Laney Littlejohn
  • Juan Rosellón

Abstract

This paper considers the regulation of pricing of liquid petroleum gas in Mexico. We construct a model that incorporates all information essential to the pricing question and derive relationships that should hold between prices in Mexico and prices in world markets. Prices in Mexico can be tied to the readily observable prices in the United States by a netback rule. However, this rule can lead to incentives to increase the price of domestic liquid petroleum gas by diverting production from the regulated market.

Suggested Citation

  • Dagobert L. Brito & William Laney Littlejohn & Juan Rosellón, 2000. "Pricing Liquid Petroleum Gas in Mexico," Southern Economic Journal, Southern Economic Association, vol. 66(3), pages 742-753, January.
  • Handle: RePEc:sej:ancoec:v:66:3:y:2000:p:742-753
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    Cited by:

    1. Dagobert Brito & Juan Rosellón, 2011. "Lumpy Investment in Regulated Natural Gas Pipelines: An Application of the Theory of the Second Best," Networks and Spatial Economics, Springer, vol. 11(3), pages 533-553, September.
    2. Rosellon, Juan, 2008. "Policy Research Supporting Policy Making: The CIDE-CRE Agreement," MPRA Paper 22419, University Library of Munich, Germany.
    3. Ramirez, Jose Carlos & Rosellon, Juan, 2002. "Pricing natural gas distribution in Mexico," Energy Economics, Elsevier, vol. 24(3), pages 231-248, May.
    4. Brito, Dagobert & Rosellón, Juan, 2002. "Timing of Investment in LPG Pipelines in Mexico," MPRA Paper 54116, University Library of Munich, Germany.
    5. Guerrero, Daniel & Rosellon, Juan, 2017. "Planeación Óptima de la Red de Transmisión Eléctrica de Baja California Sur
      [Optimal Planning of the Electricity Transmission Grid of Southern Baja California (Mexico)]
      ," MPRA Paper 83708, University Library of Munich, Germany.
    6. Brito, Dagobert & Rosellon, Juan, 2004. "Implications Of The Elasticity Of Natural Gas In Mexico On Investment In Gas Pipelines And In Setting The Arbitrage Point," MPRA Paper 54115, University Library of Munich, Germany.

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