Title page 1

Contents 1

Abstract 2

1. Introduction 4

2. Analytical approach to WTP analysis 6

2.1. Stylized duopoly case 7

2.2. Generalized model 10

3. Background for empirical analysis 13

3.1. Data 13

3.2. Industry analysis 14

3.3. Econometric procedure 18

4. Results 23

4.1. Pre-entry market analysis results 23

4.2. The WTP analysis 25

5. Conclusions 30

References 31

Appendix A. Capacity-constrained Cournot competition 38

Appendix B. Differentiated Bertrand competition 39

Appendix C. Approximation error of the WTP 40

Appendix D. Data stationarity analysis 41

Appendix E. Pre-entry market analysis 45

Tables 14

Table 1. Data and sources used in the ammonia industry analysis 14

Table 2. The choices for econometric approaches 21

Table 3. Panel OLS and FGLS regression results by region 24

Table 4. Country-level and APME region panel stationarity tests (p-values) 41

Table 5. Country-level and EU region panel stationarity tests (p-values) 42

Table 6. Country-level and NAM and SAM regions panel stationarity tests (p-values) 43

Table 7. Regional stationarity and cointegration tests (p-values) 44

Table 8. Individual country Ppreh regression results (transposed) 45

Figures 16

Figure 1. Historical ammonia production and consumption dynamics 16

Figure 2. Changes in the net trade of ammonia products over time 17

Figure 3. Historical ammonia and natural gas price dynamics 18

Figure 4. Estimated regional ammonia price markups dynamics 19

Figure 5. Correlation matrices for the key regression variables 20

Figure 6. The WTP for clean hydrogen in the ammonia industry by region 26

Figure 7. The aggregate effect of hydrogen entry 28

Figure 8. The effect of carbon price on the European hydrogen WTP 29

Figure 9. The approximation error changes with the number of incumbents 40