New market designs and their effect on economic performance in European Union's natural gas markets

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Abstract

The European gas market reform triggered new market designs which aimed to achieve competitive natural gas prices, efficiency gains, and security of gas supply. The paper analyses to what extent the effects of regulation-for-competition on eco-nomic performance in the form of natural gas prices, network tariffs, efficiency gains, and investments in gas infrastructure can be empirically studied in a European wide comparative analysis. We demonstrate that conceptual and data constraints hinder the verification of the impact of regulation-for-competition on those performance indica-tors. Natural gas prices remain oil-indexed and new investment projects are in practice exempted from competition measures. Assuming that a positive impact is a matter of fact is thus premature. A hold-up problem (where industry is reluctant to invest due to regulatory uncertainty and a lack of incentives) is difficult to quantify empirically. However, the industry's strong opposition to ownership unbundling coupled with the popularity of exemptions from third party access while still allowing long-term con-tracts does indicate that the general argument in favour of a hold-up problem has em-pirical relevance.
Original languageEnglish
Pages-
Number of pages23
Publication statusPublished - 28 Nov 2008
Event1st Annual Conference on Competition and Regulation in Network Industries, CRNI 2008 - Brussels, Belgium
Duration: 28 Nov 200828 Nov 2008
Conference number: 1

Conference

Conference1st Annual Conference on Competition and Regulation in Network Industries, CRNI 2008
Abbreviated titleCRNI
CountryBelgium
CityBrussels
Period28/11/0828/11/08

Keywords

  • IR-67280
  • Regulatory reform
  • METIS-254767
  • public utilities
  • natural gas markets
  • investments

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