Doctoral Candidate in Economics, Rice University | Graduate Fellow, Center for Energy Studies
To access the full paper, download the PDF on the left-hand sidebar.
In this paper we develop a model of global natural gas trade under imperfect competition where buyers and sellers (producers) are connected by a trading network. The market power of a producer depends on her supply capacity, her access to markets and the number of competitors she faces in each market. We apply this model to a natural gas trade network formed by using BP’s Statistical Review of 2010 major trade flows. Later, we change model parameters exogenously to analyze various policy scenarios. We find that any exogenous change affecting Europe also has an effect in the Asia Pacific. The reason is that two big producers, Russia and the Middle East, are connected to both markets. We also find that shale gas development in North America reduces natural gas producers’ market power all around the world.
This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.
