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A modified Cournot model of the natural gas market in the European Union : mixed-motives delegation in a politicized environment
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| Abstract |
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| 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. (C) 2011 Elsevier Ltd. All rights reserved. | | |
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English
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Energy policy. - Guildford, 1973, currens | |
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Guildford : 2012
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0301-4215 [print]
1873-6777 [online]
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41(2012), p. 280-285
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000301155500029
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