Natural gas industry's response to transaction costs
Legislators and regulators have historically viewed the organizational features in the natural gas industry as noncompetitive. Challenging recent suggestions that the contractual arrangements in the industry are in violation of antitrust statutes, the author states that the methods of organization such as long-term contracts, take-or-pay provisions, and most-favored nation clauses are competitive responses to the costs of transacting in the natural gas industry. These arrangements lower transaction costs by mitigating the opportunistic behavior that can potentially arise in long-term relations involving specialized assets. If policymakers want to enable cost reductions in the industry to reduce the price burden felt by users of gas, an accompaniment of price decontrol by overall deregulation is in order.
- OSTI ID:
- 5661177
- Journal Information:
- Public Util. Fortn.; (United States), Vol. 116:2
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
29 ENERGY PLANNING
POLICY AND ECONOMY
NATURAL GAS
DEREGULATION
NATURAL GAS INDUSTRY
COMPETITION
CONTRACTS
ANTITRUST LAWS
ECONOMICS
MARKETING
ENERGY SOURCES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
INDUSTRY
LAWS
031000* - Natural Gas- Legislation & Regulations
294003 - Energy Planning & Policy- Natural Gas