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INVESTMENT OPTIONS AND BARGAINING POWER: THE EURASIAN SUPPLY CHAIN FOR NATURAL GAS* |
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| Authors: | FRANZ HUBERT SVETLANA IKONNIKOVA |
| Affiliation: | 1. Humboldt–Universit?t zu Berlin, Spandauer Str. 1, 10178 Berlin, Germany email:hubert@wiwi.hu‐berlin.de;2. Center for Energy Economics, Bureau of Economic Geology, University of Texas at Austin, University Station, Box X, Austin, Texas, U.S.A. e‐mail:svetlana.ikonnikova@beg.utexas.edu |
| Abstract: | We use cooperative game theory to analyze the power structure in the pipeline network for Russian gas. If the assessment is narrowly focused on the abilities to obstruct flows in the existing system, the main transit countries, Belarus and Ukraine, appear to be strong. Once investment options are accounted for, Russia achieves clear dominance. Competition between transit countries is of little strategic relevance compared to Russia's direct access to its customers. Comparing our theoretical results with empirical evidence, we find that the Shapley value explains the power of major transit countries better than the core and the nucleolus. |
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