Impact of Liberalization on Italian Retail Gas Prices

This paper aims to analyze the effects deriving from the liberalization process in the Italian natural gas market carried out by the Italian government through the legislative decree n. 164/2000. More specifically, the objective is to analyze the competitiveness in the retail market. In order to do so, it is necessary to begin by observing the average retail prices established by various retail operators and their differences with regard to the two categories of consumers (domestic and industrial) and to geographical position. The cost of imported natural gas plays an important role in the determination of the retail price. Thus we investigate the relationship between the retail and import price and the changes in this relationship due to the liberalization process. The analysis is performed through a linear regression regarding two time periods: firstly a pre-liberalization period from 1992 to 1997, followed by a post-liberalization period from 1998 to 2003.