The Drivers behind Gas Market Liberalization: Diversity of Gas Sources, Market Structure and Gas Prices

Iweta Opolska, Michal Jakubczyk

Abstract


This paper studies how European Union members’ individual gas market characteristics, i.e. source diversification, incumbent firms’ market share and gas prices, measured at the start of liberalization process, influenced the full market opening timetable. A linear regression model is proposed with the time lag to the introduction of liberalization since 1998 (the first EU gas directive) as a dependent variable and the market characteristics as independent variables. The model is applied to cross-sectional data for 13 European countries. The results confirm the statistically significant impact of the market characteristics on the liberalization schedule. Our model explains 90% variation in the dependent variable. The more concentrated initial gas import structure and the higher import dependence were, the later the full market opening was scheduled. The more competitive gas market structure and the higher the average gas prices at the start of deregulation were, the sooner the gas sector was open to competition. The conclusions of the paper can be important for a better understanding of the liberalization process in the European Union and for application of EU deregulation experience to other countries.

Full Text: PDF DOI: 10.5539/ibr.v6n7p14

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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