Effects of liberalizing the natural gas market in western Europe
- Foundation for Research in Economics and Business Administration, Oslo (Norway)
This paper uses a numerical model to examine the long-run impact of a radical liberalization of the West-European natural gas markets. We study profit maximizing Cournot producers facing an ideal third party access regime for gas transport. producers sell gas weather to large users in the manufacturing industry and to gas-fired thermal power plants, or to loval distribution companies. We first examine the case where no traders exploit arbitrage possibilities and some producers have limited access to the markets. In this equilibrium net prices differ across markets. These differences disappear in the second case where traders are introduced. The third case focuses on a complete European market for natural gas in which traders exploit all arbitrage possibilities and all producers can sell gas in all markets. We also study the impact on the complete European market of changes in costs for production, transport, and distribution. Finally, welfare implications from a liberalization of the West-European natural gas markets are discussed. We argue that a radical liberalization could increase economic welfare in Western Europe by 15% to 20% in the long run. 35 refs., 9 tabs.
- Sponsoring Organization:
- USDOE
- OSTI ID:
- 376902
- Journal Information:
- Energy Journal, Vol. 16, Issue 1; Other Information: PBD: 1995
- Country of Publication:
- United States
- Language:
- English
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