Title
A modified Cournot model of the natural gas market in the European Union : mixed-motives delegation in a politicized environment A modified Cournot model of the natural gas market in the European Union : mixed-motives delegation in a politicized environment
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Guildford ,
Subject
Physics
Chemistry
Biology
Engineering sciences. Technology
Source (journal)
Energy policy. - Guildford, 1973, currens
Volume/pages
41(2012) , p. 280-285
ISSN
0301-4215
1873-6777
ISI
000301155500029
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
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.
E-info
https://repository.uantwerpen.be/docman/iruaauth/010617/25f1591.pdf
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