Universität zu Köln

Growitsch, Christian, Hecking, Harald and Panke, Timo (2014). Supply Disruptions and Regional Price Effects in a Spatial Oligopoly-An Application to the Global Gas Market. Rev. Int. Econ., 22 (5). S. 944 - 976. HOBOKEN: WILEY. ISSN 1467-9396

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Abstract

Supply shocks in the global gas market may affect countries differently, as the market is regionally interlinked but not perfectly integrated. Additionally, high supply-side concentration may expose countries to market power in different ways. To evaluate the strategic position of importing countries with regard to gas supplies, we disentangle the import price into different components and characterize each component as price increasing or price decreasing. Because of the complexity of the interrelations in the global gas market, we use an equilibrium model programmed as a mixed complementarity problem (MCP) and simulate the blockage of liquefied natural gas (LNG) flows through the Strait of Hormuz. This enables us to account for the oligopolistic nature and the asymmetry of the gas supply. We find that Japan faces the most severe price increases, as the Japanese gas demand completely relies on LNG supply. In contrast, European countries such as the UK benefit from good interconnection to the continental pipeline system and domestic price taking production, both of which help to mitigate an increase in physical costs of supply as well as in the exercise of market power.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Growitsch, Christian UNSPECIFIED UNSPECIFIED UNSPECIFIED Hecking, Harald UNSPECIFIED UNSPECIFIED UNSPECIFIED Panke, Timo UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-425001
DOI:	10.1111/roie.12138
Journal or Publication Title:	Rev. Int. Econ.
Volume:	22
Number:	5
Page Range:	S. 944 - 976
Date:	2014
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1467-9396
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language NATURAL-GAS; COMPLEMENTARITY MODEL; EQUILIBRIUM; COMPETITION Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/42500