Regional Effects of Energy Price Decontrol: The Roles of Interregional Trade, Stockholding, and Microeconomic Incidence

Joseph P. Kalt and Robert A. Leone

RAND Journal of Economics, 1986, vol. 17, issue 2, 201-213

Abstract: Policy debates over energy pricing frequently pit "producing states" against "consuming states." Such a distinction ignores the fact that ownership of energy-producing and energy-using assets is geographically dispersed, and that trade links regional economies. Incorporating these factors as well as alternative patterns of the incidence of higher gas prices into an analysis of natural gas decontrol reveals a significant influence on the net interregional transfers resulting from decontrol. Apparent "consuming" regions could benefit from gas decontrol, and "consuming" regions generally do not benefit from policies that tax producer windfalls from decontrol and then redistribute the revenues as compensation to gas users.

Date: 1986
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