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Ownership Separation of the Gas Transportation Network: Theory and Practice

28 Pages Posted: 6 Apr 2008  

Susanna Dorigoni

Bocconi University - CERTeT - Centre for Research on Regional Economics, Transport and Tourism; Bocconi University, Milan

Federico Pontoni

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy

Date Written: January 3, 2008

Abstract

This article analyzes the pros and cons of ownership separation of the gas transportation network. This analysis is made with a specific test that confronts two pairs of different theoretical approaches on vertical integration. The result of this test shows that no uncontroversial solution can be offered to this problem, since all arguments (be them in favour or against) can be comfortably contrasted by a counterargument. In our view, an effective regulation would solve the problem, even though it has to be highlighted that ownership separation of the gas transportation network is not the key aspect of the gas industry. EU directives, in fact, cannot be applied where the biggest part of the value chain is produced, that is to say beyond the European borders, where an oligopoly operates. Due to its bargaining power, this oligopoly captures almost all the scarcity rent, reducing the scope for market liberalization.

Keywords: Natural Monopoly, Ownership separation, Vertical foreclosures, Countervailing powers

JEL Classification: L95, L51

Suggested Citation

Dorigoni, Susanna and Pontoni, Federico, Ownership Separation of the Gas Transportation Network: Theory and Practice (January 3, 2008). Available at SSRN: https://ssrn.com/abstract=1116550 or http://dx.doi.org/10.2139/ssrn.1116550

Susanna Dorigoni (Contact Author)

Bocconi University - CERTeT - Centre for Research on Regional Economics, Transport and Tourism ( email )

Via Roentgen 1
Milan, 20144
Italy

Bocconi University, Milan ( email )

viale Filippetti, 9
Milan, 20122
Italy

HOME PAGE: http://www.iefe.unibocconi.it

Federico Pontoni

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

viale Filippetti, 9
Milan, 20122
Italy

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