Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222051 
Year of Publication: 
2019
Series/Report no.: 
IEHAS Discussion Papers No. MT-DP - 2019/4
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Budapest
Abstract: 
Existing cooperative game theoretic studies of bargaining power in gas pipeline systems are based on the so called characteristic function form (CFF). This approach is potentially misleading if some pipelines fall under regulated third party access (TPA). TPA, which is by now the norm in the EU, obliges the owner of a pipeline to transport gas for others, provided they pay a regulated transport fee. From a game theoretic perspective, this institutional setting creates so called "externalities", the description of which requires partition function form (PFF) games. In this paper we propose a method to compute payoffs, reflecting the power structure, for a pipeline system with regulated TPA. The method is based on an iterative flow mechanism to determine gas flows and transport fees for individual players and uses the recursive core and the minimal claim function to convert the PPF game back into a CFF game, which can be solved by standard methods. We illustrate the approach with a simple stylized numerical example of the gas network in Central Eastern Europe with a focus on Ukraine's power index as a major transit country.
Subjects: 
externalities
networks
natural gas
cooperative game theory
recursive core
JEL: 
C61
C71
Q40
Q48
D86
L14
Document Type: 
Working Paper

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