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Pipeline Power

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  • Franz Hubert
  • Onur Cobanli

Abstract

We use cooperative game theory to analyze the strategic impact of three controversial pipeline projects. 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. The project has a large potential to curtail 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," FIW Working Paper series 093, FIW.
    • Handle: RePEc:wsr:wpaper:y:2012:i:093
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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.
    2. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. [経済]パイプラインとゲーム理論
      by himaginary in himaginaryの日記 on 2012-06-22 12:00:00
    2. Game theory with pipelines
      by Economic Logician in Economic Logic on 2012-06-21 19:54:00

    Citations

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    Cited by:

    1. Sergio Currarini & Carmen Marchiori & Alessandro Tavoni, 2016. "Network Economics and the Environment: Insights and Perspectives," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 159-189, September.
    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. Natalya Gennadievna Dzhurka, 2021. "Research on Spatial Economic Interactions: A Cooperative Game Theory Approach," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 144-162.
    4. Roberto Roson & Franz Hubert, 2015. "Bargaining Power and Value Sharing in Distribution Networks: A Cooperative Game Theory Approach," Networks and Spatial Economics, Springer, vol. 15(1), pages 71-87, March.
    5. Ekaterina Orlova & Franz Hubert, 2012. "Competition or Countervailing Power for the European Gas Market," EcoMod2012 4490, EcoMod.
    6. Jan Abrell and Hannes Weigt, 2016. "The Short and Long Term Impact of Europe's Natural Gas Market on Electricity Markets until 2050," The Energy Journal, International Association for Energy Economics, vol. 0(Sustainab).

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    More about this item

    Keywords

    Bargaining Power; Transport Network; Natural Gas;
    All these keywords.

    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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