Market-Based Regulation of Natural Gas Pipelines

Dan Alger and Michael Toman ()

Journal of Regulatory Economics, 1990, vol. 2, issue 3, 263-80

Abstract: We argue that some forms of market-based regulation allowed within current statutory constraints can outperform traditional rate-setting regulation now used for interstate natural gas pipelines. In particular, a resale market for pipeline capacity rights can yield efficient choices in the short term, even for a natural monopoly pipeline. We also propose applying market mechanisms to setting the pipeline's original rates. The paper reviews experimental evidence on the performance of some of the proposed rate-setting institutions and describes some specific proposals made by pipelines that are consistent with those described here. Copyright 1990 by Kluwer Academic Publishers

Date: 1990
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