Competition Buzz:Regulatory Reform in Mexico’s Natural Gas Industry: Liberalization in the Context of a Dominant Upstream Incumbent

Juan Rosellon, Centro de Investigación y Docencia Económicas

Jonathan Halpern, Georgetown University; World Bank

Liberalization of the natural gas industry is complex because the sector combines activities with natural monopoly characteristics with activities that are potentially competitive. The challenges are compounded when the State opts to retain vertically integrated monopolies in otherwise contestable segments of the industry. Regulatory issues associated with partial liberalization of natural gas markets are analyzed through a case study of Mexico.

Regulatory problems associated with a partial liberalization of the gas sector are analyzed here, with authors Juan Rosellon and Jonathan Halpern commenting on various aspects of the process, such as the speed of reform and its success in attracting higher rates of investment. The particular characteristics of this industry, those which argue for a natural monopoly as well as those which illustrate its potential for competition, are analysed and annotated, providing recommendations and further questions about the new regulations.

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