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Pipeline Power

Author

Listed:
  • Franz Hubert

    () (Humboldt–Universitat zu Berlin)

  • Onur Cobanli

    () (Humboldt–Universitat zu Berlin)

Abstract

We use cooperative game theory to analyze the impact of three controversial pipeline projects on the power structure in the Eurasian trade of natural gas. Two of them, Nord Stream and South Stream, allow Russian gas to bypass transit countries, Ukraine and Belarus. Nord Stream’s strategic value turns out to be huge, justifying the high investment cost for Germany and Russia. The additional leverage obtained through South Stream, in contrast, appears small. The third project, Nabucco, aims at diversifying Europe’s gas imports by accessing producers in Middle East and Central Asia. It curtails Russia’s power, but the benefits accrue mainly to Turkey, while the gains for the EU are negligible.

Suggested Citation

  • Franz Hubert & Onur Cobanli, 2012. "Pipeline Power," Koç University-TUSIAD Economic Research Forum Working Papers 1224, Koc University-TUSIAD Economic Research Forum.
  • Handle: RePEc:koc:wpaper:1224
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    File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1224.pdf
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    References listed on IDEAS

    as
    1. Waft Grais & Kangbin Zheng, 1996. "Strategic Interdependence in European East-West Gas Trade: A Hierarchical Stackelberg Game Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 61-84.
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    Cited by:

    1. Currarini, Sergio & Marchiori, Carmen & Tavoni, Alessandro, 2016. "Network economics and the environment: insights and perspectives," LSE Research Online Documents on Economics 63951, London School of Economics and Political Science, LSE Library.
    2. Roberto Roson & Franz Hubert, 2013. "Bargaining Power, Energy Security and Networks: an Applied Game Theory Approach," International Conference on Energy, Regional Integration and Socio-economic Development 5877, EcoMod.
    3. Roberto Roson & Franz Hubert, 2015. "Bargaining Power and Value Sharing in Distribution Networks: A Cooperative Game Theory Approach," Networks and Spatial Economics, Springer, pages 71-87.
    4. Ekaterina Orlova & Franz Hubert, 2012. "Competition or Countervailing Power for the European Gas Market," EcoMod2012 4490, EcoMod.

    More about this item

    Keywords

    Bargaining Power; Network; Trade links; Natural Gas;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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