Gas pricing in a liberalized European market; will the rent be taxed away?

The European gas market will become 'more liberal'. Depending on in which segments competition is intensified and public interference takes place, prices in the gas chain will be affected. Rent may be redistributed among firms and prices will become more volatile, If supply overshoots demand for a long period, average consumer prices may also be pushed down. Rent may also end up as tax revenues for public authorities. This article argues that an active use of gas taxes as an instrument to derive public revenues increases the probability of a politically led liberalization process. The effect of these economic and political forces and actions may, however, be less new gas to the market. (C) 1997 Published by Elsevier Science Ltd. All rights reserved.