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Trade Liberalization, Transportation, and the Environment

H. Landis Gabel and Lars-Hendrik Roller

Year: 1992
Volume: Volume 13
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No3-10
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Abstract:
This paper is an empirical study of the consequences of European trade liberalization for international transport demand and its environmental impact. The European market is broken into nine trading blocks, and trade flow equations for 29 industries are estimated for the period 1975-1985. A simulation of the change in volumes of trade byindustry and the distances trade goods must move generates an estimate of the increased transport demand in each industry. Data on the modal composition of transportation in each industry then allow an aggregation of demand across industries by transport mode-truck, train, sea, and inland waterway.The study concludes that the greatest increases will be in the demand for international transportation by sea, but that in terms of land-based transportation, there will be a large relative shift from rail to road. This will have a major adverse environmental impact which is discussed in the paper.



Oil Industry Development and Trade Liberalization in the Western Hemisphere

Stephen J. Randall

Year: 1993
Volume: Volume14
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No3-5
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Abstract:
This paper provides an overview of oil industry developments in the Western Hemisphere with particular emphasis on Latin America since the inauguration of the Enterprise for the Americas Initiative by George Bush. I discuss thesedevelopments in the context of the Canada-U.S. Free Trade Agreement (concluded in 1989), and the negotiation in 1992 of the North American Free Trade Agreement (NAFTA). This paper is concerned essentially with the oil industry and does not discuss the importance of natural gas for Canadian producers nor the fact that much of Latin American oil production (notably in Mexico) is associated with natural gas. I examine the shift to trade and investment liberalization and privatization in the 1980s and early 1990s, especially in Latin America-where the most dramatic transformation has occurred. I suggest that investment patterns in the industry have been only marginally related to trade liberalization, and have derived more from considerations of resource availability, exploration and development costs, market factors, and the general state of the international economy-all of which have contributed in the 1980s to significant restructuring and downsizing among a number of major corporations. I also note the important increase in an internal Latin American market, and the role of regional organizations such as ARPEL-the Association of Latin American State Oil Company Producers.



Effects of Liberalizing the Natural Gas Markets in Western Europe

Rolf Golombek, Eystein Gjelsvik and Knut Einar Rosendahl

Year: 1995
Volume: Volume16
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No1-6
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Abstract:
This paper uses a numerical model to examine the long-run impact of a radical liberalization of the West-European natural gas markets. We study profit maximizing Cournot producers facing an ideal third party access regime for gas transport. Producers sell gas either to large users in the manufacturing industry and to gas-fired thermal power plants, or to local distribution companies. We first examine the case where no traders exploit arbitrage possibilities and some producers have limited access to the markets. In this equilibrium net prices differ across markets. These differences disappear in the second case where traders are introduced. The third case focuses on a complete European market for natural gas in which traders exploit all arbitrage possibilities and all producers can sell gas in all markets. We also study the impact on the complete European market of changes in costs for production, transport, and distribution. Finally, welfare implications from a liberalization of the West-European natural gas markets are discussed. We argue that a radical liberalization could increase economic welfare in Western Europe by 15% to 20% in the long run.



Increased Competition on the Supply Side of the Western European Natural Gas Market

Rolf Golombek, Eystein Gjelsvik, and Knut Einar Rosendahl

Year: 1998
Volume: Volume19
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol19-No3-1
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Abstract:
This paper analyzes how the supply side of the Western European natural gas market may react if the demand side becomes competitive. We show-using a numerical model of the Western European natural gas market-that once the demand side of the market is liberalized, each gasproducing country has an incentive to break up its gas sellers. The model therefore suggests that there may be numerous producers in a liberalized natural gas market. Hence, in a liberalized market consumers will not be exploited by suppliers.



Market Power in Electricity Markets: Beyond Concentration Measures

Severin Borenstein, James Bushnell and Christopher R. Knittel

Year: 1999
Volume: Volume20
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No4-3
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Abstract:
The wave of electricity market restructuring both within the United States and abroad has brought the issue of horizontal market power to the forefront of energy policy. Traditionally, estimation and prediction of market power has relied heavily on concentration measures. In this paper, we discuss the weaknesses of concentration measures as a viable measure of market power in the electricity industry, and we propose an alternative method based oil market simulations that take advantage of existing plant level data. We discuss results from previous studies the authors have performed, and present new results that allow for the detection of threshold demand levels where market power is likely to be a problem. In addition, we analyze the impact of that recent divestitures in the California electricity market will have on estimated market power. We close with a discussion of the policy implications of the results.



Trade Liberalization and Carbon Leakage

Onno Kuik and Reyer Gerlagh

Year: 2003
Volume: Volume24
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol24-No3-4
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Abstract:
This paper examines the effect of trade liberalization on carbon leakage. We present quantitative estimates of carbon leakage under the Kyoto Protocol with and without freer trade by means of import tariff reductions agreed to in the Uruguay Round of multilateral trade negotiations. We find that under a plausible range of assumptions, the implementation of these import tariff reductions increases the overall rate of leakage, suggesting that previous studies may structurally have underestimated the rate of carbon leakage under the Kyoto Protocol. But we also find that the costs of abating the trade-induced leakage are modest relative to the welfare gains of freer trade. Analysis of the trade-induced carbon leakage shows large differences between leakage caused by reductions of import tariffs on energy goods and by reductions of import tariffs on non-energy goods. It also shows large differences in emission responses among developing country regions.



Trading in the Downstream European Gas Market: A Successive Oligopoly Approach

Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs

Year: 2004
Volume: Volume 25
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No3-5
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Abstract:
A model of successive oligopoly is applied to the European natural gas market. The model has a two-level structure, in which Cournot producers are also Stackelberg leaders with respect to traders, who may be Cournot oligopolists or price takers. Several conclusions emerge. First, successive oligopoly ("double marginalization") yields higher prices and lower consumer welfare than if oligopoly exists only on one level. Second, due to the high concentration of traders, prices are distorted more by market power in trading than in production. Third, trader profits depend on whether producers can price discriminate among consuming sectors; if so, producers collect a greater share of the profits. Finally, when traders increase in number, prices approach competitive levels. Thus, it is important to prevent concentration in the downstream gas market. If oligopolistic trading cannot be prevented, vertical integration should not be discouraged, especially if it would increase the number of traders.



Introduction

David Newbery

Year: 2005
Volume: Volume 26
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-NoSI-1
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Abstract:
Europe is liberalising electricity in accordance with the European Commission's Electricity Directives. Different countries have responded differently, notably in the extent of restructuring, treatment of mergers, market power, and vertical unbundling. While Britain and Norway have achieved effective competition, others like Germany, Spain and France are still struggling to deal with dominant and sometimes vertically integrated companies. The Netherlands offers an interesting intermediate case, where good economic analysis has sometimes been thwarted by legalistic interpretations. Investment under the new Emissions Trading system could further transform the electricity industry but may be hampered by slow progress in liberalising European gas markets.



Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration

Tooraj Jamasb and Michael Pollitt

Year: 2005
Volume: Volume 26
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-NoSI-2
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Abstract:
The energy market liberalisation process in Europe is increasingly focused on electricity market integration and related cross border issues. This signals that the liberalisation of national electricity markets is now closer to the long-term objective of a single European energy market. The interface between the national electricity markets requires physical interconnections and technical arrangements. However, further progress towards this objective also raises important issues regarding the framework within which the integrated market is implemented. This paper reviews the progress towards a single European electricity market. We then discuss the emerging issues of market concentration, investments, and security of supply as well as some aspects of market design and regulation that are crucial for dynamic performance of a single European market.



Electricity liberalization in Britain: The quest for a satisfactory wholesale market design

David M. Newbery

Year: 2005
Volume: Volume 26
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-NoSI-3
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Abstract:
Britain was the exemplar of electricity market reform, demonstrating the importance of ownership unbundling and workable competition in generation and supply. Privatisation created de facto duopolies that supported increasing price-cost margins and induced excessive (English) entry. Concentration was ended by trading horizontal for vertical integration in subsequent mergers. Competition arrived just as the Pool was replaced by New Electricity Trading Arrangements (NETA) intended to address its claimed shortcomings. NETA cost over �700 million, and had ambiguous market impacts. Prices fell dramatically as a result of (pre-NETA) competition, generating companies withdrew plant, causing fears about security of supply and a subsequent widening of price-cost margins.




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