The European Commission has intensively discussed the mandatory separation of natural gas transmission from production and services. However, economic theory is ambiguous on the price eﬀects of vertical separation. In this paper, we empirically analyse the eﬀect of ownership unbundling of gas transmission networks as the strongest form of vertical separation on the level of end-user prices. Therefore, we apply diﬀerent dynamic estimators as system GMM and the bias-corrected least-squares dummy variable or LSDVC estimator on an unbalanced panel out of 18 EU countries over 19 years, allowing us to avoid the endogeneity problem and to estimate the long-run eﬀects of regulation. We introduce a set of regulatory indicators as market entry regulation, ownership structure, vertical separation and market structure and account for structural and economic country speciﬁcs. Among these diﬀerent estimators, we consistently ﬁnd that ownership unbundling has no impact on natural gas end-user prices, while the more modest legal unbundling reduces them signiﬁcantly. Furthermore, third-party access, market structure and privatisation show signiﬁcant inﬂuence with the latter leading to higher price levels.
Natural gas Networks Regulation Ownership unbundling Panel data