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The Rise and Fall of Oil Prices: a Competitive View

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  • Jacques Cremer
  • Djavad Salehi-Isfahani

Abstract

This paper develops a competitive theory of the recent history of the oil market. We show that the supply curve for oil is backward bending, and that the presence of multiple equilibria explains better than cartel theories the behavior of the principal participants in this market. We study some implications of this theory for the short run and long run stability of the price.

Suggested Citation

  • Jacques Cremer & Djavad Salehi-Isfahani, 1989. "The Rise and Fall of Oil Prices: a Competitive View," Annals of Economics and Statistics, GENES, issue 15-16, pages 427-454.
    • Handle: RePEc:adr:anecst:y:1989:i:15-16:p:427-454
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    File URL: http://www.jstor.org/stable/20075767
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    Cited by:

    1. Arvind Subramanian & Aaditya Mattoo, 2008. "Multilateralism Beyond Doha," Working Papers 153, Center for Global Development.
    2. De Santis, Roberto A., 2003. "Crude oil price fluctuations and Saudi Arabia's behaviour," Energy Economics, Elsevier, vol. 25(2), pages 155-173, March.
    3. Alvarez-Ramirez, Jose & Ibarra-Valdez, Carlos & Bernabe, Araceli & Rodriguez, Eduardo, 2005. "Power-law periodicity in the 2003–2004 crude oil price dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 349(3), pages 625-640.
    4. S. Gurcan Gulen, 1996. "Is OPEC a Cartel? Evidence from Cointegration and Causality Tests," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 43-57.
    5. Villoria, Nelson & Hertel, Thomas, 2011. "The Role of Geography in Determining the Global Land Use Impacts of Biofuels," Conference papers 332071, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Weiyu Gao & Peter Hartley & Robin Sickles, 2009. "Optimal dynamic production from a large oil field in Saudi Arabia," Empirical Economics, Springer, vol. 37(1), pages 153-184, September.
    7. Durand-Lasserve, Olivier & Pierru, Axel, 2021. "Modeling world oil market questions: An economic perspective," Energy Policy, Elsevier, vol. 159(C).
    8. Bernabe, Araceli & Martina, Esteban & Alvarez-Ramirez, Jose & Ibarra-Valdez, Carlos, 2004. "A multi-model approach for describing crude oil price dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 338(3), pages 567-584.
    9. Loutia, Amine & Mellios, Constantin & Andriosopoulos, Kostas, 2016. "Do OPEC announcements influence oil prices?," Energy Policy, Elsevier, vol. 90(C), pages 262-272.
    10. Giraud, Pierre-Noel, 1995. "The equilibrium price range of oil : Economics, politics and uncertainty in the formation of oil prices," Energy Policy, Elsevier, vol. 23(1), pages 35-49, January.
    11. Jean-Philippe Stijns, 2003. "An Empirical Test of the Dutch Disease Hypothesis using a Gravity Model of Trade," International Trade 0305001, University Library of Munich, Germany.
    12. Timilsina, Govinda R. & Shrestha, Ashish, 2008. "The growth of transport cector CO2 emissions and underlying factors in Latin America and the Caribbean," Policy Research Working Paper Series 4734, The World Bank.

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