The Danube Region Gas Market Model

The paper introduces the Danube Region Gas Market Model, a network and contract constrained multicountry competitive equilibrium model and applies it to estimate the impacts of new gas infrastructure investments on market integration, social welfare and supply security in the countries of Central and South East Europe. Individual projects, project packages (e.g. the North-South gas corridor for Central and Eastern Europe) and international pipeline projects (like Nabucco West) are evaluated according to the Regional Cost Convergence Index. Estimates on price spill-over effects of new infrastructures are also presented. The model can support cost benefit analyses foreseen by the proposed European Infrastructure Package to identify EU projects of common interest.