Competition and cooperation in the natural gas market: a game-theoretic demand-base analysis

Youngho Chang (), Dang Thi Quynh Trang, Tsiat Siong Tan and Farhad Taghizadeh-Hesary ()
Additional contact information
Youngho Chang: Singapore University of Social Sciences
Dang Thi Quynh Trang: Nanyang Technological University
Tsiat Siong Tan: Singapore University of Social Sciences

Asia Europe Journal, 2021, vol. 19, issue 1, No 3, 49 pages

Abstract: Abstract This paper aims to explore various possibilities in the evolving global gas market by constructing game-theoretical models involving the major players: Russia and Qatar exporting gas to the Asia-Pacific and Europe, respectively. We explore a series of hypothetical scenarios based on competitive and collusive settings for the Asia-Pacific LNG market and based on Qatar’s export route to the European gas market. The scenarios that are examined are (1) Russia as the follower and Qatar as the leader in a Stackelberg game; (2) Russia and Qatar as Cournot competitors; (3) collaboration between Russia and Qatar as bilateral monopolies; (4) Qatar exporting gas to European borders; (5) Qatar exporting gas to the last transit country; and (6) Qatar transporting gas to the Turkish border under a multi-pricing scheme. Demand is estimated under each scenario to simulate the respective export volumes, prices and quantities, and profit in each scenario. By exploring these market interactions, we find that it is essential for Russia to strike a deal with Qatar in the Asian market and accelerate their gas production in order to compete as an LNG market leader. Russia is likely to benefit more if it can link with Qatar to act as a monopoly on their segmental demand curve. On the other hand, Qatar’s profit is expected to be higher under the scenario when Qatar sells all the gas to the last transit country as the sole demand point instead of passing through transit countries.

JEL-codes: L13 L71 Q37 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 (5)

Downloads: (external link)
http://link.springer.com/10.1007/s10308-021-00615-5 Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:asiaeu:v:19:y:2021:i:1:d:10.1007_s10308-021-00615-5

Ordering information: This journal article can be ordered from
http://www.springer. ... es/journal/10308/PS2

DOI: 10.1007/s10308-021-00615-5

Access Statistics for this article

Asia Europe Journal is currently edited by Ulrich Volz and Lay Hwee Yeo

More articles in Asia Europe Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().