The analyses of price differential in Japanese natural gas industry

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Japanese natural gas industry has two types of utility’s organizational forms: One has only a sales sector and the other utilizes both a manufacturing and a sales sector. And the price differential exists between two utilities. This study analyzes two points. The first is to analyze the reason whether a utility possesses manufacturing sector or not. The second is to estimate the factor of price differential.Based on transaction cost economics, I consider the reason of first point by means of empirical analysis. The estimation result indicates that site specificity and short term uncertainty affect having manufacturing sector.I also estimate the factor of price differential by empirical models. In conclusion, I found that the way to get gas, third party access, and incidental business affect gas retail price.