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A New Game Theoretical Approach for Modeling Export Energy Markets Equilibria

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  • Ibrahim Abada
  • Andreas Ehrenmann

Abstract

For resource-based economies, regulating exports is crucial. Nevertheless, we observe different countries deploying different export policies. We explain this difference via strategic interactions by giving two competing countries the possibility to design their export markets and select the level of competition they exert.In a first step, we test standard models and find that they fail to explain the multitude of observed behaviors: under the closed loop Nash equilibrium paradigm, the equilibrium is reached when countries completely open their export market.The Stackelberg game on the other hand concentrates the market in a plausible way but is not symmetric since it appoints a leader and follower. In a second step, we let countries choose between being strategic or passive in their interaction and demonstrate that the competitive outcome that we find in the closed loop Nash game rarely occurs. Only this last setup complies with the commonly observed situations.

Suggested Citation

  • Ibrahim Abada & Andreas Ehrenmann, 2018. "A New Game Theoretical Approach for Modeling Export Energy Markets Equilibria," The Energy Journal, , vol. 39(5), pages 55-84, September.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:5:p:55-84
    DOI: 10.5547/01956574.39.5.iaba
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    References listed on IDEAS

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