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Abstract: Price Regulation in a Vertically Integrated Natural Gas Industry: The Case of Mexico
Abstract
Price Regulation in a Vertically Integrated Natural Gas Industry: The Case of Mexico
The Review of Network Economics
Vol. 4, Issue 1 - March 2005, pp 75 - 92
Author
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Dagobert L. Brito
Department of Economics and Baker Institute, Rice University
Juan Rosellón Centro de Investigación y Docencia Económicas (CIDE)
E-mail: [email protected] |
Abstract
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The Comisión Reguladora de Energía of Mexico has implemented a netback rule for linking the
Mexican natural gas price to the Texas natural gas benchmark price in an industry structure
characterized by a vertically integrated state-owned monopoly. This paper shows that in an open
economy where agents can choose between gas and alternative fuels, and where the density function
describing the distribution of agents along the pipeline can have mass points, the netback rule is
Pareto optimal.
Keywords: vertical integration, gas, mexico, netback rule, regulation
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