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Elasticities of Supply for the US Natural Gas Market

Micaela Ponce and Anne Neumann

No 1372, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In this paper we investigate natural gas producer's reactions to changes in market prices. We estimate price elasticities of aggregated supply in the most competitive market for natural gas: the United States. Using monthly time series data form 1987 to 2012 our analysis is based on an Autoregressive Distributed Lag (ARDL) Bound Cointegration approach to obtain short and long-run elasticities of natural gas supply. Results suggest that natural gas producers in a competitive market are not able to react to prices in the very short-run but respond inelastic in the long-run. These findings are not only of great value for policy makers but also for gas market modelers.

Keywords: Financial autarky; complete markets; long-run risk; anomalies (search for similar items in EconPapers)
JEL-codes: C22 C32 L95 Q41 (search for similar items in EconPapers)
Pages: 13 p.
Date: 2014
New Economics Papers: this item is included in nep-com, nep-ene and nep-reg
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