Browsing by Author "Cigerli, Burcu"
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Item An Imperfectly Competitive Model of the World Natural Gas Market(2013) Cigerli, Burcu; James A. Baker III Institute for Public PolicyIn this paper we develop a model of global natural gas trade under imperfect competition where buyers and sellers (producers) are connected by a trading network. The market power of a producer depends on her supply capacity, her access to markets and the number of competitors she faces in each market. We apply this model to a natural gas trade network formed by using BP’s Statistical Review of 2010 major trade flows. Later, we change model parameters exogenously to analyze various policy scenarios. We find that any exogenous change affecting Europe also has an effect in the Asia Pacific. The reason is that two big producers, Russia and the Middle East, are connected to both markets. We also find that shale gas development in North America reduces natural gas producers’ market power all around the world.Item Comparison of Vehicle Fuel and CO2 Footprints by Technology Type(James A. Baker III Institute for Public Policy, 2012) Cigerli, Burcu; Medlock, Kenneth B. III; James A. Baker III Institute for Public PolicyItem Effects of North American Shale Gas on the World Natural Gas Market(James A. Baker III Institute for Public Policy, 2013) Cigerli, Burcu; James A. Baker III Institute for Public PolicyIn this paper, we develop an “OPEC” type of model for the world natural gas market where buyers and sellers (dominant producers and competitive fringe) are connected by a trading network. The market power of a producer depends on its supply capacity, its elasticity of supply, the number of competitors it faces in each market and their supply elasticities. We apply this model to a natural gas trade network based on BP’s Statistical Review of World Energy 2010 major trade flows. We then expand this network by allowing for North American natural gas exports. In our model, strategic interactions of all the producers and consumers in the world natural gas trade network determine the export volumes from North America and their impacts on North American natural gas prices. We find that North America exports natural gas when its supply curve is highly elastic and hence the domestic price impact of its exports is very small. Even so, the price impacts on the importing markets are substantial. We also find that shale gas development in North America decreases dominant producers’ market power and hence decreases the incentive of any parties to form a natural gas cartel.Item Modeling competition in natural gas markets(2013-09-16) Cigerli, Burcu; Hartley, Peter R.; Medlock, Kenneth B., III; Embree, MarkThis dissertation consists of three chapters; each models competition in natural gas markets. These models provide insight into interactions between changes in market conditions/policies and market players’ strategic behavior. In all three chapters, we apply our models to a natural gas trade network formed by using BP’s Statistical Review of World Energy 2010 major trade flows. In the first chapter, we develop a model for the world natural gas market where buyers and sellers are connected by a trading network. Each natural gas producer is a Cournot player with a fixed supply capacity. Each of them is also connected to a unique set of importing markets. We show that this constrained noncooperative Cournot game is a potential game and its potential function has a unique maximizer. In the scenario analysis, we find that any exogenous change affecting Europe also has an effect in the Asia Pacific. The reason is that two big producers, Russia and the Middle East, are connected to both markets. We also find that a collusive agreement between Russia and the Middle East leads them to specialize in supply to markets based on their marginal costs of exporting natural gas. The second chapter is devoted to analyzing the impacts of North American shale gas on the world natural gas market. To better represent the North American natural gas market, this chapter also allows for perfect competition in that market. We find that North America exports natural gas when its supply curve is highly elastic and hence the domestic price impact of its exports is very small. Even so, the price impacts on the importing markets are substantial. We also find that shale gas development in North America decreases dominant producers’ market power elsewhere in the world and hence decreases the incentive of any parties to form a natural gas cartel. In the third chapter, we relax the assumption of fixed supply capacities and allow for natural gas producers to invest in their supply capacities. We assume a two period model with no uncertainty and show that there is a unique Cournot-Nash equilibrium and the open-loop Cournot-Nash equilibrium and closed-loop Cournot-Nash equilibrium investments coincide.Item Strategic Capacity Investments in an Imperfectly Competitive World Natural Gas Market(James A. Baker III Institute for Public Policy, 2013) Cigerli, Burcu; James A. Baker III Institute for Public PolicyIn this paper, we develop a model for the world natural gas market where buyers and sellers are connected by a trading network. However, this paper extends Cigerli (2013) by relaxing the assumption of fixed supply capacities and allowing for natural gas producers to invest in their supply capacities. We assume a two period model with no uncertainty and show that there is a unique Cournot-Nash equilibrium and the open-loop Cournot-Nash equilibrium and closed-loop Cournot-Nash equilibrium investments coincide. We apply this model to a network formed by using BP’s Statistical Review of World Energy 2010 major trade flows. Later, we change model parameters exogenously to analyze various policy scenarios. We find that producers respond to changes in market conditions by investing in their supply capacities instead of displacing their resources from other markets.