Elasticities of Supply for the US Natural Gas Market

Discussion Papers 1372, 13 S.

Micaela Ponce, Anne Neumann

2014

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Abstract

In this paper we investigate natural gas producer's reactions to changes in market prices. We estimate price elasticities of aggregated supply in the most competitive market for natural gas: the United States. Using monthly time series data form 1987 to 2012 our analysis is based on an Autoregressive Distributed Lag (ARDL) Bound Cointegration approach to obtain short and long-run elasticities of natural gas supply. Results suggest that natural gas producers in a competitive market are not able to react to prices in the very short-run but respond inelastic in the long-run. These findings are not only of great value for policy makers but also for gas market modelers.



JEL-Classification: L95;Q41;C22;C32
Keywords: Financial autarky, complete markets, long-run risk, anomalies
Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/95945