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Infrastructure integration and incomplete contracts: natural gas in the Southern Cone

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  • Navajas, Fernando H.

Abstract

This paper uses evidence on policies, markets and private transactions to discuss the experience of natural gas infrastructure integration in the Southern Cone of Latin America. The argument is that contracts on international exchanges supported by infrastructure may become incomplete due to contingencies related to policy-induced price distortions not anticipated at the moment of writing. Beyond regulatory risk mitigation, it calls for back-up contract provisions designed to cope with aggregate imbalances and for some supranational coordination related to information about market conditions and on energy planning dialogues that test consistency and stress situations in markets where exports originate

Suggested Citation

  • Navajas, Fernando H., 2008. "Infrastructure integration and incomplete contracts: natural gas in the Southern Cone," MPRA Paper 31025, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:31025
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    File URL: https://mpra.ub.uni-muenchen.de/31025/1/MPRA_paper_31025.pdf
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    References listed on IDEAS

    as
    1. Masten, Scott E, 1988. "Minimum Bill Contracts: Theory and Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 85-97, September.
    2. Christian Hirschhausen & Anne Neumann, 2008. "Long-Term Contracts and Asset Specificity Revisited: An Empirical Analysis of Producer–Importer Relations in the Natural Gas Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 131-143, March.
    3. Keith J. Crocker & Scott E. Masten, 1988. "Mitigating Contractual Hazards: Unilateral Options and Contract Length," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 327-343, Autumn.
    4. Daniel Heymann, 2008. "Macroeconomics of Broken Promises," Chapters, in: Roger E.A. Farmer (ed.), Macroeconomics in the Small and the Large, chapter 4, Edward Elgar Publishing.
    5. Masten, Scott E & Crocker, Keith J, 1985. "Efficient Adaptation in Long-term Contracts: Take-or-Pay Provisions for Natural Gas," American Economic Review, American Economic Association, vol. 75(5), pages 1083-1093, December.
    6. repec:idb:brikps:33038 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Diego Barril and Fernando Navajas, 2015. "Natural Gas Supply Behavior under Interventionism: The Case of Argentina," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    2. Navajas, Fernando H., 2009. "Engel curves, household characteristics and low-user tariff schemes in natural gas," Energy Economics, Elsevier, vol. 31(1), pages 162-168, January.
    3. Kwok-Chiu Fung & Alicia Garcia-Herrero & Francis Ng, 2012. "Foreign direct investment in financing regional infrastructure," Chapters, in: Biswa Nath Bhattacharyay & Masahiro Kawai & Rajat M. Nag (ed.), Infrastructure for Asian Connectivity, chapter 11, pages 402-431, Edward Elgar Publishing.

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    More about this item

    Keywords

    Natural gas; integration; long-term contracts;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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