TY - JOUR
T1 - A modified Cournot model of the natural gas market in the European Union
T2 - Mixed-motives delegation in a politicized environment
AU - Jansen, Thijs
AU - van Lier, Arie
AU - van Witteloostuijn, Arjen
AU - Boon von Ochssée, Tim
PY - 2012/2/1
Y1 - 2012/2/1
N2 - With Gazprom gaining prominence as the major supplier of natural gas in the European Union, the European gas market becomes more politicized. We assume that Gazprom's interest as a state monopolist is not only to maximize profit, but also to seek market power, presumably because this contributes to the geopolitical power of Russia at large. We introduce a modeling tool, so-called strategic delegation games, to analyze the implications of Gazprom's operation in the EU. By way of illustration, we model the case where Gazprom competes against two profit-maximizing rivals: Algerian Sonatrach and Norwegian Statoil. We prove that if Gazprom serves any of a comprehensive type of nonprofit objectives, the outcome is beneficial for the EU's consumers, as Gazprom's behavior shifts volumes up and brings prices down.
AB - With Gazprom gaining prominence as the major supplier of natural gas in the European Union, the European gas market becomes more politicized. We assume that Gazprom's interest as a state monopolist is not only to maximize profit, but also to seek market power, presumably because this contributes to the geopolitical power of Russia at large. We introduce a modeling tool, so-called strategic delegation games, to analyze the implications of Gazprom's operation in the EU. By way of illustration, we model the case where Gazprom competes against two profit-maximizing rivals: Algerian Sonatrach and Norwegian Statoil. We prove that if Gazprom serves any of a comprehensive type of nonprofit objectives, the outcome is beneficial for the EU's consumers, as Gazprom's behavior shifts volumes up and brings prices down.
KW - Cournot duopoly
KW - Natural gas market
KW - Nonprofit incentives
UR - http://www.scopus.com/inward/record.url?scp=84855936046&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84855936046&partnerID=8YFLogxK
U2 - 10.1016/j.enpol.2011.10.047
DO - 10.1016/j.enpol.2011.10.047
M3 - Article
AN - SCOPUS:84855936046
SN - 0301-4215
VL - 41
SP - 280
EP - 285
JO - Energy Policy
JF - Energy Policy
ER -