Regulating international gas transport: Welfare effects of postage stamp and entry-exit systems

• Type: Article in International Scientific Journal
• Date: 2014

Authors

Maria Isabel Soares (Author) FEP; António Brandão (Author) FEP; Joana Resende (Author) FEP; Joana Pinho (Author) FEP; Paula Sarmento (Author) FEP

Journal

Title: Energy

Vol. 69

Pages: 86-95

ISSN: 0360-5442

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 5 Citations

ISI Web of Science

Scopus - 5 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-009-GQC

DOI: 10.1016/j.energy.2014.01.006

Abstract (EN): There is no consensus on the method to set transmission tariffs for natural gas. The entry-exit system is widely used in European markets because it is cost reflective, it allows the network users to separately book capacity for entry and exit points, beyond its pro-competitiveness characteristics. Some authors, however, defend the adoption of the postage stamp (where a single tariff is charged regardless of the origin of the gas), due to its simplicity. Our goal is to compare these two mechanisms of transmission tariff with respect to the impacts on welfare. We find that the welfare effects crucially depend on the size of the internal market and the fixed costs supported by the incumbent firm. If the domestic market is sufficiently large and there are imports from abroad, consumer surplus is higher under the postage stamp system.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 10