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Title:
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Modelling the role of transmission companies in the downstream European gas market
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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1-7-2000
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ECN report number:
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Document type:
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ECN-RX--00-025
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Article (scientific)
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Number of pages:
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25
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Published in: Submitted for publication to the Energy Journal (), , , Vol., p.-.
Abstract:
This paper describes the empirical model GASTALE and shows severalanalyses of the European gas market using this model. These analyses are
mainly focused on the role of the downstream transmission companies.
Producers of natural gas are assumed to form an oligopoly throughout the
paper. Considering an oligopolistic transmission structure our model results
show that the level of transmitters' profits strongly depends on the
possibilities of discrimination on the border prices. If price discrimination
by producers is allowed, these producers collect the main part of the margins
on end-use prices. Without price discrimination the transmission companies
collect most of the margins. Assuming an oligopolistic downstream structure,
end-use prices converge to prices corresponding to perfect competition when
the number of transmitters increases. Given the oligopolistic structure of
the upstream industry, it is of importance to prevent (or abolish)
monopolistic structures in the downstream gas market. In the case where
oligopolistic competition between downstream gas companies cannot be
prevented, vertical integration should be supported (or at least not be
discouraged). 14 refs.
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