An Asymmetric Bargaining Model for Natural-Gas Distribution

Abstract

For the sustainable socio-economic growth, the energy supply is one of the foundations for any country. The gas shortage is one of the most significant impediments to any emerging country’s economic progress, making it a contested and disputed resource. In the middle of a supply–demand mismatch, distributing limited available gas across administrative units/provinces with competing requirements is a key challenge. In this work, an asymmetric gas allocation bargaining model is proposed under gas shortage to resolve natural gas-related disputes among Pakistan’s administrative units/provinces. Each administrative unit/province is characterized by its gas demand. Results show that the Nash bargaining theory, when applied under equal and bargaining weights, can address the supply–demand mismatches of the gas sector in Pakistan. Such an approach could help policymakers to make a fair gas-supply management system during gas shortage periods and would help in resolving the disputes between the provinces.