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Who decides the rules for network use? A ‘common pool’ analysis of gas network regulation

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  • HALLACK, MICHELLE
  • VAZQUEZ, MIGUEL

Abstract

Gas sector liberalization is based on opening networks to different players, so they become common pool resources. Different players using the same resources can give rise to “commons’ dilemmas”. To avoid them, rules must be established to constrain players’ use of the network. We build on the concept of common's pool resources to analyze the logic for and consequences of different institutional settings governing the use of gas pipelines. We show that rules based on regulation imply ex ante decisions that preclude players to choose the preferred output. This limitation may be removed by rules designed by market players. We also show that the mechanism to define the rules is based on the definition of network use property rights. The practical implications of our approach are stressed by comparing the US mechanism (negotiated rules) and the EU mechanism (regulated rules).

Suggested Citation

  • Hallack, Michelle & Vazquez, Miguel, 2014. "Who decides the rules for network use? A ‘common pool’ analysis of gas network regulation," Journal of Institutional Economics, Cambridge University Press, vol. 10(3), pages 493-512, September.
  • Handle: RePEc:cup:jinsec:v:10:y:2014:i:03:p:493-512_00
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    Cited by:

    1. Schlesewsky Lisa, 2018. "Think small – Das deutsche Stromnetz als Hindernis für die Energiewende," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 69(1), pages 309-338, July.
    2. De Meio Reggiani, Martin C. & Vazquez, Miguel & Hallack, Michelle & Brignole, Nélida B., 2019. "The role of governmental commitment on regulated utilities," Energy Economics, Elsevier, vol. 84(C).
    3. Jing Xu & Michelle Hallack & Miguel Vazquez, 2017. "Applying a third party access model for China’s gas pipeline network: an independent pipeline operator and congestion rent transfer," Journal of Regulatory Economics, Springer, vol. 51(1), pages 72-97, February.
    4. Shastitko, A. & Kurdin, A. & Filippova, I., 2020. "Structural alternatives of the gas transportation organization through an insulated pipeline," Journal of the New Economic Association, New Economic Association, vol. 47(3), pages 128-156.

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