THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS

THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS

In this paper we develop a model of the law of one price in a network where many markets are linked with a structure of paths. We show that arbitrage‐free prices depend on the structure of the network and so do price dynamics. Our estimates indicate that local bypass and open access pipeline transpo...

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Veröffentlicht in:Journal of regional science 1996-11, Vol.36 (4), p.555-570
Hauptverfasser: De Vany, Arthur, Walls, W. David
Format: Artikel
Sprache:eng
Schlagworte:
Arbitrage
Bgi / Prodig
Dynamics
Economic theory
Energy
Geography of industry and energy
Human geography
Market potential
Markets
Mathematical models
Natural gas
Natural gas distribution
Pipelines
Prices
Studies
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container_title Journal of regional science
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creator De Vany, Arthur
Walls, W. David
description In this paper we develop a model of the law of one price in a network where many markets are linked with a structure of paths. We show that arbitrage‐free prices depend on the structure of the network and so do price dynamics. Our estimates indicate that local bypass and open access pipeline transportation were instrumental in opening arbitrage paths to natural gas city markets and causing their prices to converge. Spot markets in the city gates, pipeline hubs, and production fields, that are scattered over distant points in the vast pipeline network in the United States, now form a single market.
doi_str_mv 10.1111/j.1467-9787.1996.tb01118.x
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source Applied Social Sciences Index & Abstracts (ASSIA); Wiley Online Library Journals Frontfile Complete; PAIS Index; Business Source Complete; Periodicals Index Online
subjects Arbitrage
Bgi / Prodig
Dynamics
Economic theory
Energy
Geography of industry and energy
Human geography
Market potential
Markets
Mathematical models
Natural gas
Natural gas distribution
Pipelines
Prices
Studies
title THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS
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