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Pipeline Power

Author

Listed:
  • Franz Hubert

    (Humboldt–Universitat zu Berlin)

  • Onur Cobanli

    (Humboldt–Universitat zu Berlin)

Abstract

We use cooperative game theory to analyze the impact of three controversial pipeline projects on the power structure in the Eurasian trade of natural gas. Two of them, Nord Stream and South Stream, allow Russian gas to bypass transit countries, Ukraine and Belarus. Nord Stream’s strategic value turns out to be huge, justifying the high investment cost for Germany and Russia. The additional leverage obtained through South Stream, in contrast, appears small. The third project, Nabucco, aims at diversifying Europe’s gas imports by accessing producers in Middle East and Central Asia. It curtails Russia’s power, but the benefits accrue mainly to Turkey, while the gains for the EU are negligible.

Suggested Citation

  • Franz Hubert & Onur Cobanli, 2012. "Pipeline Power," Koç University-TUSIAD Economic Research Forum Working Papers 1224, Koc University-TUSIAD Economic Research Forum.
    • Handle: RePEc:koc:wpaper:1224
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    File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1224.pdf
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    References listed on IDEAS

    as
    1. Waft Grais & Kangbin Zheng, 1996. "Strategic Interdependence in European East-West Gas Trade: A Hierarchical Stackelberg Game Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 61-84.
    2. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
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    Cited by:

    1. Sergio Currarini & Carmen Marchiori & Alessandro Tavoni, 2016. "Network Economics and the Environment: Insights and Perspectives," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 159-189, September.

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    More about this item

    Keywords

    Bargaining Power; Network; Trade links; Natural Gas;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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