Gas Release and Transport Capacity Investment as Instruments to Foster Competition in Gas Markets

Chaton, Corinne, Gasmi, Farid, Guillerminet, Marie-Laure and Oviedo, Juan Daniel (2010) Gas Release and Transport Capacity Investment as Instruments to Foster Competition in Gas Markets. TSE Working Paper, n. 10-203

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Official URL: http://tse-fr.eu/pub/23579

Abstract

Motivated by recent policy events experienced by the European natural gas industry,
this paper develops a simple model for analyzing the interaction between
gas release and capacity investment programs as tools to improve the performance
of imperfectly competitive markets. We consider a regional market in
which a measure that has an incumbent release part of its gas to a marketer
complements a program of investment in transport capacity dedicated to imports
by the marketer, at a regulated transport charge, of competitively-priced
gas. First, we examine the case where transport capacity is regulated while gas
release is not, i.e., the volume of gas released is determined by the incumbent.
We then analyze the effect of the "artifcial" duopoly created by the regulator
when the latter regulates both gas release and transport capacity. Finally, using
information on the French industry, we calibrate the basic demand and cost
elements of the model and perform some simulations of these two scenarios. Besides
allowing us to analyze the economic properties of these scenarios, a policy
implication that comes out of the empirical analysis is that, when combined
with network expansion investments, gas-release measures applied under regulatory
control are indeed effective short-term policies for promoting gas-to-gas
competition.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2010
Uncontrolled Keywords: Natural gas, Gas release, Regulation, Competition
JEL codes: L51 - Economics of Regulation
L95 - Gas Utilities; Pipelines; Water Utilities
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 18 Jan 2012 06:03
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:23579
URI: http://publications.ut-capitole.fr/id/eprint/3532

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