Microeconomic aspect of natural gas market liberalization in BiH

Abstract

This paper analyzes the microeconomic aspects of natural gas market liberalization in Bosnia and Herzegovina, with the aim of determining whether liberalization leads to a reduction in natural gas prices. Using a comparative approach, the markets of Germany, Croatia, and Serbia are analyzed as countries with different degrees of liberalization. The focus of the paper is on market structure, regulatory model, and the impact of liberalization on prices. Different regulatory models are analyzed, including incentive-based models in Germany and Croatia, and the "cost-plus" model in Serbia. The paper also examines market characteristics and structures, including the presence of oligopoly in liberalized markets and monopoly in underdeveloped segments, as well as the role of long-term contracts and price indexation. In the case of Bosnia and Herzegovina, liberalization requires infrastructure development and the establishment of an appropriate regulatory model, whereby the entry of new market participants plays a key role in encouraging competition and market development.