Pipeline Power: A Case Study of Strategic Network Investments

Review of Network Economics - Tập 14 Số 2 - 2015
Franz Hubert1, Onur Cobanli2
1Humboldt Universität zu Berlin, Berlin, Germany
2Compass Lexecon, London, United Kingdom of Great Britain and Northern Ireland

Tóm tắt

AbstractWe analyze the impact of three controversial pipeline projects on the power structure in the Eurasian network for natural gas. Two pipelines, “Nord Stream” and “South Stream,” allow Russian gas to bypass transit countries, Ukraine and Belarus. The third project, “Nabucco,” aims at diversifying Europe’s gas imports by accessing producers in Middle East and Central Asia. If network power is measured with the Shapley Value we obtain a clear ranking of the projects which corresponds to the observed investment patterns. Nord Stream’s strategic value is huge, easily justifying the high investment cost for Germany and Russia. The additional leverage obtained through South Stream is much smaller and Nabucco is not viable. For the nucleolus in contrast, none of the pipelines has any strategic relevance at all, which contradicts the empirical evidence on investment.

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Review of Network Economics

Tập 14 Số 2

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