Commitment strategies and market power in the natural gas market.


Laure Durand-Viel

This thesis is devoted to the analysis of commitment strategies in oligopolistic markets, with a particular focus on the European market for natural gas. The first chapter focuses on capacity investments in a bilateral relationship where the buyer- investor faces the threat of holdup. While some commitment is necessary to ensure investment, a too long commitment by the seller can lead to a lower investment level. The second chapter analyzes the strategic use of storage in a successive oligopoly and shows that while demand preemption through storage can be profitable, firms can however choose to commit not to use such a strategy. The third chapter provides a positive and normative analysis of gas release programs that aim at fostering competition in the downstream gas market by granting new entrants access to the incumbent's long-term contracts with foreign producers. Finally, the fourth chapter analyzes how real asset valuation methods based on spot market arbitrage can lead to suboptimal investment choices.

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