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Structural alternatives of the gas transportation organization through an insulated pipeline

Author

Listed:
  • Shastitko, A.

    (Lomonosov Moscow State University, Moscow, Russia
    Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)

  • Kurdin, A.

    (Lomonosov Moscow State University, Moscow, Russia
    Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)

  • Filippova, I.

    (Lomonosov Moscow State University, Moscow, Russia
    Gaidar Institute for Economic Policy, Moscow, Russia)

Abstract

Regulation of natural monopolies implies strict adherence to the legislation that does not take into account the variety of circumstances of activities and the possible transactions organization options. The litigation between the "Rosneft" and "Sakhalin Energy" companies about the access to the gas pipeline, which connects the gas field in the North of the Sakhalin Island with the liquefied natural gas (LNG) plant in the Southern part of the Island, is analyzed. It is shown that consideration of a broader range of institutional alternatives of the gas transportation organization through an insulated pipeline is necessary. The basis of the regulator decisions is the existence of market for gas transportation services, which in fact is not (and should not be) the default option. An approach to such situations analysis is proposed, it allows covering a wide range of institutional alternatives that could provide a higher level of social welfare. The Grossman-Hart model of incomplete contracts and its verification on real data is used for the demonstration that a simple decision to allow an isolated pipeline access, when the participants of the transaction are independent, can lead to a decrease of the public welfare, compared with alternatives involving integration.

Suggested Citation

  • 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.
    • Handle: RePEc:nea:journl:y:2020:i:47:p:128-156
    DOI: 10.31737/2221-2264-2020-47-3-6
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    References listed on IDEAS

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    More about this item

    Keywords

    pipelines; incomplete contracts theory; Grossman-Hart model; antitrust regulation; institutional alternatives;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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