EconPapers    
Economics at your fingertips  
 

Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe

Peter Buhanist
Additional contact information
Peter Buhanist: Department of Management, Estonian Business School, Tallinn, The Republic of Estonia

International Journal of Energy Economics and Policy, 2015, vol. 5, issue 4, 934-948

Abstract: This paper seeks to explain the persistence of a business model that was instrumental in creating pan-European natural gas markets but refused to retire when the markets outgrew it. Long-term oil-indexed agreements enabled the emergence of international gas markets in Europe since the early 1960s and they still govern gas imports to the European Union. Yet, they failed to evolve with the changing business environment, resulting in the strategic costs for the companies. A politicized topic, research has thus far focused on national and regional levels, largely ignoring company level processes. This article contributes to the understanding of European gas markets by introducing a company level behavioral explanation of the endurance of an institutionalized but seemingly outdated business model. Path dependence is found to be a major contributing factor of the behavior of agents. Business leaders and governments alike will benefit from learning to identify and avoid path dependent behavior that leads to potentially sub-optimal outcomes.

Keywords: Gas Trade; Gazprom; Path Dependence (search for similar items in EconPapers)
JEL-codes: F M Q (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.econjournals.com/index.php/ijeep/article/download/1298/849 (application/pdf)
http://www.econjournals.com/index.php/ijeep/article/view/1298/849 (text/html)

Related works:
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:eco:journ2:2015-04-05

Access Statistics for this article

International Journal of Energy Economics and Policy is currently edited by Ilhan Ozturk

More articles in International Journal of Energy Economics and Policy from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().

 
Page updated 2018-12-22
Handle: RePEc:eco:journ2:2015-04-05