Analyzing the effects of import liberalization in the Turkish natural gas market

Abstract

In this paper, we analyze the economic consequences of full import liberalization of the Turkish natural gas market. For this purpose, we build a simple game-theoretic model where exporters of natural gas may face supply constraints. We first derive equilibrium quantity and market price analytically with and without capacity constraints of the exporters. Then, we compute estimates of equilibrium quantity and prices using calibrated demand functions. Our results suggest that full market liberalization will bring huge economic gains to the Turkish consumers.