On Modeling the European Market for Natural Gas

Several features may separately or in combination influence conduct and performance of an industry, e.g., the numbers of sellers or buyers, the degree of economies of scale in production and distribution, the temporal and spatial dimensions, uncertainty about long run development of demand in particular combined with large investments in production capacity and infrastructure etc. Our focus is modeling in order to obtain insight into market mechanisms and price formation. In particular, we demonstrate the rather different solutions obtained from the price-taking behavior versus the oligopolistic Cournot behavior when the spatial dimension is observed.