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Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe

Year 2015, Volume: 5 Issue: 4, 934 - 948, 01.12.2015

Abstract

This paper seeks to explain the persistence of a business model that was instrumental in creating pan-European natural gas markets but refused to retire when the markets outgrew it. Long-term oil-indexed agreements enabled the emergence of international gas markets in Europe since the early 1960s and they still govern gas imports to the EU. Yet, they failed to evolve with the changing business environment, resulting in the strategic costs for the companies. A politicized topic, research has thus far focused on national and regional levels, largely ignoring company level processes. This article contributes to the understanding of European gas markets by introducing a company level behavioral explanation of the endurance of an institutionalized but seemingly outdated business model. Path dependence is found to be a major contributing factor of the behavior of agents. Business leaders and governments alike will benefit from learning to identify and avoid path dependent behavior that leads to potentially sub-optimal outcomes.

Year 2015, Volume: 5 Issue: 4, 934 - 948, 01.12.2015

Abstract

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Details

Other ID JA59DT39HJ
Journal Section Research Article
Authors

Peter Buhanist This is me

Publication Date December 1, 2015
Published in Issue Year 2015 Volume: 5 Issue: 4

Cite

APA Buhanist, P. (2015). Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe. International Journal of Energy Economics and Policy, 5(4), 934-948.
AMA Buhanist P. Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe. IJEEP. December 2015;5(4):934-948.
Chicago Buhanist, Peter. “Path Dependency in the Energy Industry: The Case of Long-Term Oil-Indexed Gas Import Contracts in Continental Europe”. International Journal of Energy Economics and Policy 5, no. 4 (December 2015): 934-48.
EndNote Buhanist P (December 1, 2015) Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe. International Journal of Energy Economics and Policy 5 4 934–948.
IEEE P. Buhanist, “Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe”, IJEEP, vol. 5, no. 4, pp. 934–948, 2015.
ISNAD Buhanist, Peter. “Path Dependency in the Energy Industry: The Case of Long-Term Oil-Indexed Gas Import Contracts in Continental Europe”. International Journal of Energy Economics and Policy 5/4 (December 2015), 934-948.
JAMA Buhanist P. Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe. IJEEP. 2015;5:934–948.
MLA Buhanist, Peter. “Path Dependency in the Energy Industry: The Case of Long-Term Oil-Indexed Gas Import Contracts in Continental Europe”. International Journal of Energy Economics and Policy, vol. 5, no. 4, 2015, pp. 934-48.
Vancouver Buhanist P. Path Dependency in the Energy Industry: The Case of Long-term Oil-indexed Gas Import Contracts in Continental Europe. IJEEP. 2015;5(4):934-48.