Pricing Natural Gas in Mexico: An Application of the Little‐Mirrlees Rule—The Case of Quasi‐Rents

Dagobert L. Brito and Juan Rosellon

Southern Economic Journal, 2010, vol. 76, issue 4, 1131-1136

Abstract: In 1997, the Comisión Reguladora de Energía of Mexico implemented a netback rule for linking the Mexican natural gas price to the Texas price. At that time, the Texas price reflected a reasonably competitive market. There have been dramatic increases in the demand for gas, and there are various bottlenecks in the supply of gas. As a result, the price of gas in Texas now reflects the quasi‐rents created by these bottlenecks. We show that it is optimal for the Mexican government to use the netback rule based on the Texas price of gas to set the price of gas in Mexico even though the Texas market cannot be considered a competitive market, and the Texas price for gas reflects quasi‐rents created by various bottlenecks.

Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.4284/sej.2010.76.4.1131

Related works:
Working Paper: Pricing Natural Gas in Mexico: An Application of the Little Mirrlees Rule: The Case of Quasi-Rents (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:76:y:2010:i:4:p:1131-1136

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().