Games in the Eurasian gas supply network: Multinational bargaining, Strategic investment, and Hold-up
The paper analyzes multilateral relations and distortions of investments in the Eurasian gas network, supplying gas from countries of the Former Soviet Union to Western Europe. We use a two stage model of endogenous coalition formation to study cooperation among gas producers and transiters, some lacking the ability to make long-term commitments. In the first stage, the players cooperate to invest in pipelines and contract the sharing of rents. In the second stage, players form supply chains and bargain over supply profit sharing. Since competing supply chains can be formed, cooperation involves externalities. Our quantitative analysis predicts overinvestment as well as underinvestment in the network as an attempt to create countervailing power. Among other things we explain why Russia invests in the expensive pipeline through the Baltic sea and why Caspian gas producers are eager to build expensive bypasses around Russia.
|Date of creation:||2007|
|Date of revision:||Nov 2008|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ilya Segal, 2003. "Collusion, Exclusion, and Inclusion in Random-Order Bargaining," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 439-460.
- Lars A. Stole & Jeffrey Zwiebel, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 375-410.
- Yi, Sang-Seung & Shin, Hyukseung, 2000. "Endogenous formation of research coalitions with spillovers," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 229-256, February.
- Rajan, Roby, 1989. "Endogenous Coalition Formation in Cooperative Oligopolies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 863-876, November.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:17852. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.