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ECN publication
Modelling the role of transmission companies in the downstream European gas market
Published by: Publication date:
ECN Policy Studies 1-7-2000
ECN report number: Document type:
ECN-RX--00-025 Article (scientific)
Number of pages:

Published in: Submitted for publication to the Energy Journal (), , , Vol., p.-.

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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