Energy markets , natural gas , market entry , forward integration , vertical integration , market foreclosure
Abstract:
Due to potential abuse of the market power at wholesale and retail market level for natural
gas the Federal Cartel Office in Germany prohibited further forward integration of gas
importing firms with retail incumbents from 2005/2006 to 2010. The Authority argued that
the very few dominant gas importing companies, which also own and operate the gas
pipelines, could have an incentive to foreclose existing competitors or prevent potential
market entry. However, two of the importing companies remained extensively forward
integrated. To analyze possible forward integration issues empirically we employ cross
sectional data (for September 2009) for about 500 sub markets for household customers in
Germany. These submarkets have different vertical ownership structures. Our data set
contains information on ownership and market entry. By applying a market entry model,
which is based on the framework introduced by Bresnahan and Reiss (1991), we do not find
clear evidence that market entry is restricted by forward integration of gas importers and
retail incumbents.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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