Regulation and State Intervention in Non-Renewable Natural Resources: The Cases of the Oil and Gas Sectors in Argentina
51 Pages Posted: 23 Jan 2015
Date Written: April 1, 2014
Abstract
This paper develops a theoretical model based on stylized facts regarding regulation and performance of the oil and gas sectors in Argentina after the fall of Convertibility. Regarding performance, facts include an important drop in domestic production and investment, as well as a reversal in the energy trade balance (from surplus to deficit). Regulations include a direct government intervention in upstream and downstream prices (below international ones), together with strong restrictions to export. The model uses a self-enforcing equilibrium concept derived from Yared (2010) to endogeneize such policy variables such as upstream domestic prices and downstream energy prices. The model can explain some of the regulation policies observed in the facts, including very low energy prices and strictly positive subsidies.
Keywords: Regulation, non-renewable resources, energy, political economy models
JEL Classification: Q38, Q48
Suggested Citation: Suggested Citation