An exploration of a strategic competition model for the European Union natural gas market

Following Jansen et al. (2012), we examine an unconventional Cournot model of the European Union natural gas market with three major suppliers: Russian Gazprom, Norwegian Statoil, and Algerian Sonatrach. To reflect Russia's other strategic consideration besides profit, we incorporate a relative market share into Gazprom's objective function. We prove that when Gazprom pursues the control of market share along with profit, it will be good news for consumers but bad news for its pure profit maximising rivals. We further show that by seeking a proper market share, Gazprom can achieve the same profit of a Stackelberg leader in a simultaneous move model as in the standard sequential move leader-follower model. Compared with Jansen et al.'s, our approach makes both the analysis considerably simpler and more transparent, and the model more applicable.