Modeling transfer profits as externalities in a cooperative game-theoretic model of natural gas networks

Dávid Csercsik, Franz Hubert, Balázs Sziklai and László Kóczy ()

Energy Economics, 2019, vol. 80, issue C, 355-365

Abstract: Existing cooperative game theoretic studies of bargaining power in gas pipeline systems are based on the so called characteristic function form (CFF). This approach is potentially misleading if some pipelines fall under regulated third party access (TPA). TPA, which is by now the norm in the EU, obliges the owner of a pipeline to transport gas for others, provided they pay a regulated transport fee. From a game theoretic perspective, this institutional setting creates so called “externalities”, the description of which requires partition function form (PFF) games. In this paper we propose a method to compute payoffs, reflecting the power structure, for a pipeline system with regulated TPA. The method is based on an iterative flow mechanism to determine gas flows and transport fees for individual players and uses the recursive core and the minimal claim function to convert the PPF game back into a CFF game, which can be solved by standard methods. We illustrate the approach with a simple stylized numerical example of the gas network in Central Eastern Europe with a focus on Ukraine's power index as a major transit country.

Keywords: Externalities; Networks; Natural gas; Cooperative game theory; Recursive core (search for similar items in EconPapers)
JEL-codes: C61 C71 D86 L14 Q40 Q48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988319300283
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Modelling transfer profits as externalities in a cooperative game-theoretic model of natural gas networks (2019)
Working Paper: Modelling transfer profits as externalities in a cooperative game-theoretic model of natural gas networks (2019)
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:eee:eneeco:v:80:y:2019:i:c:p:355-365

DOI: 10.1016/j.eneco.2019.01.013

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().