Horizontal Cooperation in Network Expansion: An Empirical Evaluation of Gas Transportation Networks

This research presents a coordination approach for the expansion of gas transportation networks to serve an increasing customer base. An empirical study of natural gas markets in the southeastern United States shows that horizontal cooperation among transportation service providers (i.e., pipeline companies) allows for expanding the gas transportation networks efficiently to serve new customers. The benefits of coordination are identified through key structural elements such as number and location of additional pipeline links, lower infrastructure expansion costs, and demand segmentation for the gas transportation service providers.