Abstract
This paper develops a theoretical model based on stylized facts regarding regulation and performance of the oil and gas sectors in Argentina after the fall of Convertibility. Regarding performance, facts include an important drop in domestic production and investment, as well as a reversal in the energy trade balance (from surplus to de…cit). Regulations include a direct government intervention in upstream and downstream prices (below international ones), together with strong restrictions to export. The model uses a self-enforcing equilibrium concept derived from Yared (2010) to endogeneize such policy variables such as upstream domestic prices and downstream energy prices. The model can explain some of the regulation policies observed in the facts, including very low energy prices and strictly positive subsidies.
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