Do LPG prices react to the entry of natural gas? Implications for competition policy

Aldo Gonzalez () and Vicente Lagos

Energy Policy, 2021, vol. 152, issue C

Abstract: In developing countries, the penetration of Liquefied Petroleum Gas (LPG) is still high, and hence the entry of Natural Gas (NG) networks coexists with the use of LPG by an important fraction of households. A relevant policy question is whether the degree of horizontal integration between NG and LPG providers has an influence on the level of retail prices. Using self-reported retail prices of the largest LPG provider in Chile during years 2013 and 2014, we estimate that the presence of a competing NG network generates an average decrease of LPG retail prices within the range [-4%,-2%]. This result suggests that the degree of horizontal integration between NG and LPG providers should matter, in particular for policy interventions such as merger control by competition authorities and the granting of concessions for deploying NG networks by sectoral regulators.

Keywords: Natural gas; Liquefied petroleum gas; Entry; Horizontal integration; Retail prices (search for similar items in EconPapers)
JEL-codes: K21 L13 L41 L95 Q41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:152:y:2021:i:c:s0301421520305255

DOI: 10.1016/j.enpol.2020.111806

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