Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Thursday, October 6, 2011

Ownership Unbundling of Gas Transmission Networks - Empirical Evidence

Posted by D. Daniel Sokol

Christian Growitsch (Energiewirtschaftliches Institut an der Universitaet zu Koeln) and Marcus Stronzik (Energiewirtschaftliches Institut an der Universitaet zu Koeln) analyze Ownership Unbundling of Gas Transmission Networks - Empirical Evidence. ABSTRACT: The European Commission has intensively discussed the mandatory separation of natural gas transmission from production and services. However, economic theory is ambiguous on the price effects of vertical separation. In this paper, we empirically analyse the effect of ownership unbundling of gas transmission networks as the strongest form of vertical separation on the level of end-user prices.

Therefore, we apply different dynamic estimators as system GMM and the bias-corrected least-squares dummy variable or LSDVC estimator on an unbalanced panel out of 18 EU countries over 19 years, allowing us to avoid the endogeneity problem and to estimate the long-run effects of regulation.

We introduce a set of regulatory indicators as market entry regulation, ownership structure, vertical separation and market structure and account for structural and economic country specifics. Among these different estim! ators, we consistently find that ownership unbundling has no impact on natural gas end-user prices, while the more modest legal unbundling reduces them significantly. Furthermore, third-party access, market structure and privatisation show significant influence with the latter leading to higher price levels.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/10/ownership-unbundling-of-gas-transmission-networks-empirical-evidence-.html

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