Universität zu Köln

Schulte, Simon and Weiser, Florian (2019). LNG import quotas in Lithuania - Economic effects of breaking Gazprom's natural gas monopoly. Energy Econ., 78. S. 174 - 182. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1873-6181

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Abstract

Until 2014, Russia's Gazprom had a natural gas monopoly in Lithuania. In order to break the Russian monopoly, the Lithuanian state financed an import terminal for liquefied natural gas (LNG) in Klaipeda. In addition to building the terminal, Lithuania signed a long-term contract (LTC) which can be interpreted as a minimum import volume quota for LNG having higher marginal supply costs than Russian gas. This study assesses the potential of such a minimum import volume quota to mitigate the market power of a monopolistic supplier. A market consisting of a dominant supplier with low marginal supply costs and a competitive fringe with high marginal supply costs is analyzed. It is shown that there is a minimum import volume quota for fringe supplies that optimizes the consumer surplus, which is adjusted by a compensation paid for the fringe's market entry. Therefore, the Lithuanian decision to incentivize the market entry of high-cost LNG can be rationalized. (C) 2018 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Schulte, Simon UNSPECIFIED UNSPECIFIED UNSPECIFIED Weiser, Florian UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-157235
DOI:	10.1016/j.eneco.2018.10.030
Journal or Publication Title:	Energy Econ.
Volume:	78
Page Range:	S. 174 - 182
Date:	2019
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1873-6181
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language TARIFFS; EQUIVALENCE; TRADE; DUOPOLY Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/15723