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Price Regulation in a Vertically Integrated Natural Gas Industry: The Case of Mexico

Author

Listed:
  • Brito Dagobert L.

    (Department of Economics and Baker Institute, Rice University)

  • Rosellón Juan

    (Centro de Investigación y Docencia Económicas (CIDE))

Abstract

The Comisión Reguladora de Energía of Mexico has implemented a netback rule for linking the Mexican natural gas price to the Texas natural gas benchmark price in an industry structure characterized by a vertically integrated state-owned monopoly. This paper shows that in an open economy where agents can choose between gas and alternative fuels, and where the density function describing the distribution of agents along the pipeline can have mass points, the netback rule is Pareto optimal.

Suggested Citation

  • Brito Dagobert L. & Rosellón Juan, 2005. "Price Regulation in a Vertically Integrated Natural Gas Industry: The Case of Mexico," Review of Network Economics, De Gruyter, vol. 4(1), pages 1-18, March.
    • Handle: RePEc:bpj:rneart:v:4:y:2005:i:1:n:6
    DOI: 10.2202/1446-9022.1067
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    Cited by:

    1. Rosellon, Juan, 2008. "Policy Research Supporting Policy Making: The CIDE-CRE Agreement," MPRA Paper 22419, University Library of Munich, Germany.
    2. Meritet, Sophie & Rosellon, Juan & Elizalde, Alberto, 2006. "LNG in the Northwestern Coast of Mexico: Impact on Prices of Natural Gas in Both Sides of the US-Mexico Border," MPRA Paper 21954, University Library of Munich, Germany.

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