IDEAS home Printed from https://ideas.repec.org/p/pav/wpaper/151.html
   My bibliography  Save this paper

Efficient Mechanisms for Access to Storage with Imperfect Competition in Gas Markets

Author

Listed:
  • Alberto Cavaliere

    (Department of Economics and Quantitative Methods, University of Pavia)

  • Valentina Giust

    (Sorgenia)

  • Mario Maggi

    (Department of Economics and Quantitative Methods, University of Pavia)

Abstract

Scarce storage capacity and distortions in access to gas storage are considered causes of market foreclosure in liberalized gas markets. We consider rules currently adopted in Europe for storage rationing and propose efficient rationing mechanism based on the value of storage, when other flexibility inputs are available. Firstly we analyse productive efficiency issues neglecting vertical restraints and strategic behaviour in the final market. Then we assume imperfect compettion in the downstream market for gas supplies, given the avaialbility of storage capacity upstream. We consider effciency issues in a two stage model comparing regulated storage tariffs – coupled with a centralizedrationing mechanism – with storage auctions. Finally we consider as an optimal mechanism the allocation of storage arising from welfare maximization by a social planner. We find that it is usually optimal to maximize the amount of storage capacity allocated to new entrants in the gas markets. Storage auctions deviates from the optimal mechanism, but still improve efficiency, with respect to current mechanisms, to the extent that they allocate storage according to its value. Furthermore storage allocation appear to be an extremeley powerful mechanism to improve competition and efficiency in gas markets.

Suggested Citation

  • Alberto Cavaliere & Valentina Giust & Mario Maggi, 2011. "Efficient Mechanisms for Access to Storage with Imperfect Competition in Gas Markets," Quaderni di Dipartimento 151, University of Pavia, Department of Economics and Quantitative Methods.
    • Handle: RePEc:pav:wpaper:151
    as

    Download full text from publisher

    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/wpaper/q151.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bonacina, Monica & Cret, Anna & Sileo, Antonio, 2009. "Gas storage services and regulation in Italy: A Delphi analysis," Energy Policy, Elsevier, vol. 37(4), pages 1277-1288, April.
    2. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    3. Janssen,Maarten (ed.), 2004. "Auctioning Public Assets," Cambridge Books, Cambridge University Press, number 9780521537575.
    4. Janssen,Maarten (ed.), 2004. "Auctioning Public Assets," Cambridge Books, Cambridge University Press, number 9780521830591.
    5. Edmond Baranes & François Mirabel & Jean-Christophe Poudou, 2009. "Natural Gas Storage and Market Power," Post-Print hal-01811032, HAL.
    6. Hoffler, Felix & Kubler, Madjid, 2007. "Demand for storage of natural gas in northwestern Europe: Trends 2005-30," Energy Policy, Elsevier, vol. 35(10), pages 5206-5219, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baranes, Edmond & Mirabel, François & Poudou, Jean-Christophe, 2014. "Access to natural gas storage facilities: Strategic and regulation issues," Energy Economics, Elsevier, vol. 41(C), pages 19-32.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cavaliere, Alberto & Giust, Valentina & Maggi, Mario, 2013. "Efficient mechanisms for access to storage when competition in gas markets is imperfect," Energy Economics, Elsevier, vol. 36(C), pages 481-490.
    2. Bettina Klose & Dan Kovenock, 2015. "Extremism drives out moderation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(4), pages 861-887, April.
    3. Gert Brunekreeft & David Newbery, 2006. "Should merchant transmission investment be subject to a must-offer provision?," Journal of Regulatory Economics, Springer, vol. 30(3), pages 233-260, November.
    4. Oliver Bruttel, 2005. "Are Employment Zones Successful? Evidence From the First Four Years," Local Economy, London South Bank University, vol. 20(4), pages 389-403, November.
    5. Paul Klemperer, 2007. "Bidding Markets," Journal of Competition Law and Economics, Oxford University Press, vol. 3(1), pages 1-47.
    6. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
    7. Leandro Arozamena & Nicholas Shunda & Federico Weinschelbaum, 2014. "Optimal nondiscriminatory auctions with favoritism," Economics Bulletin, AccessEcon, vol. 34(1), pages 252-262.
    8. Satoru Fujishige & Zaifu Yang, 2020. "A Universal Dynamic Auction for Unimodular Demand Types: An Efficient Auction Design for Various Kinds of Indivisible Commodities," Discussion Papers 20/08, Department of Economics, University of York.
    9. Ning Sun & Zaifu Yang, 2014. "An Efficient and Incentive Compatible Dynamic Auction for Multiple Complements," Journal of Political Economy, University of Chicago Press, vol. 122(2), pages 422-466.
    10. Emiel Maasland & Sander Onderstal, 2006. "Going, Going, Gone! A Swift Tour of Auction Theory and its Applications," De Economist, Springer, vol. 154(2), pages 197-249, June.
    11. Mats A. Bergman & Johan Lundberg & Sofia Lundberg & Johan Y. Stake, 2020. "Interactions Across Firms and Bid Rigging," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(1), pages 107-130, February.
    12. Isa Hafalir & Hadi Yektaş, 2011. "Selling goods of unknown quality: forward versus spot auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 15(3), pages 245-256, September.
    13. Philippe Jehiel & Benny Moldovanu, 2005. "Allocative and Informational Externalities in Auctions and Related Mechanisms," Levine's Bibliography 784828000000000490, UCLA Department of Economics.
    14. Onur A. Koska & Ilke Onur & Frank Stähler, 2018. "The scope of auctions in the presence of downstream interactions and information externalities," Journal of Economics, Springer, vol. 125(2), pages 107-136, October.
    15. Isaac, R. Mark & Salmon, Timothy C. & Zillante, Arthur, 2007. "A theory of jump bidding in ascending auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 144-164, January.
    16. Maciej Czaplewski, 2018. "Tworzenie jednolitego rynku usług telekomunikacyjnych w Unii Europejskiej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 159-181.
    17. Matteucci, Nicola, 2021. "Procuring NGA infrastructure: The performance of EMAT auctions in Italy," Telecommunications Policy, Elsevier, vol. 45(1).
    18. Constantino Hevia & Martin Gonzalez‐Rozada & Martin Sola & Fabio Spagnolo, 2015. "Estimating and Forecasting the Yield Curve Using A Markov Switching Dynamic Nelson and Siegel Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 30(6), pages 987-1009, September.
    19. Stefan Weishaar, 2007. "CO 2 emission allowance allocation mechanisms, allocative efficiency and the environment: a static and dynamic perspective," European Journal of Law and Economics, Springer, vol. 24(1), pages 29-70, August.
    20. Kang, Chao-Chung & Lee, Tsun-Siou & Huang, Szu-Chi, 2013. "Royalty bargaining in Public–Private Partnership projects: Insights from a theoretic three-stage game auction model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 59(C), pages 1-14.

    More about this item

    Keywords

    Liberalization; Auctions; Essential Facilities;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pav:wpaper:151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Paolo Bonomolo (email available below). General contact details of provider: https://edirc.repec.org/data/dppavit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.