Price Discrimination and Limits to Arbitrage in Global LNG Markets

Robert Ritz

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Gas prices around the world va’y widely despite being connected by international trade of LNG Some industry observers argue hat major exporters g , Qatar) have acted irrationally by failing to engage in price arbitrage. This is also difficult to reconcile with a perfectly competitive model in which price differences exist solely because of transport costs we show that a model with market power can rationalize observed price differentials and trade flows. We highlight how different features of the LNG market limit the ability and/or incentive of other players to arbitrage, and discuss the potential impact of US LNG exports.

Keywords: International trade; limits to arbitrage; LNG pricing; market power; natural gas; price discrimination (search for similar items in EconPapers)
JEL-codes: D40 F12 L95 (search for similar items in EconPapers)
Date: 2013-11-27
New Economics Papers: this item is included in nep-ene and nep-int
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Working Paper: Price discrimination and limits to arbitrage in global LNG markets (2013)
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