Two markets and a weak link

We characterise the relationship between two network based oligopoly markets when local players share the interconnection's ownership. To that purpose, we analyse the case of the Bacton (UK)-Zeebrugge (Belgium) natural gas pipeline using Vector Auto-regressive Representation techniques. We conclude that there is a threshold of capacity deployment after which the two local markets split. As a result, the relationship between local price differentials and capacity utilisation is increasing and convex. We also show that the local prices' dynamic structure is characterised by convergence features.