Transportation and storage under a dynamic price cap regulation process

We study the welfare effects of Price Cap Regulation (PCR) and the strategic behavior it may induce in gas transportation networks by analyzing a stylized gas network within the framework of a multi-period game model under three scenarios: No regulation, a dynamic setting where the price cap adjustment mechanism is not endogenized by the players, and a dynamic setting where it is endogenized by the players.

► We study welfare effect of PCR in gas transportation networks in a dynamic setting. ► Welfare effects differ depending on pipeline capacity being binding or not. ► When capacity is binding, the regulation benefits the downstream distribution companies. ► Strategic behavior with respect to the price cap regulation has no significant impact on profits.