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Does OPEC still exist as a cartel? An empirical investigation

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  • Brémond, Vincent
  • Hache, Emmanuel
  • Mignon, Valérie

Abstract

The aim of this paper is to determine if OPEC acts as a cartel by testing whether the production decisions of the different countries are coordinated and if they have an influence on oil prices. Relying on cointegration and causality tests in both time series and panel settings, our findings show that the OPEC influence has evolved through time, following the changes in the oil pricing system. While the influence of OPEC is found to be important just after the counter-oil shock, our results show that OPEC is a price taker on the majority of the considered sub-periods. Finally, by dividing OPEC between savers and spenders, we show that it acts as a cartel mainly with a subgroup of its members.

Suggested Citation

  • Brémond, Vincent & Hache, Emmanuel & Mignon, Valérie, 2012. "Does OPEC still exist as a cartel? An empirical investigation," Energy Economics, Elsevier, vol. 34(1), pages 125-131.
    • Handle: RePEc:eee:eneeco:v:34:y:2012:i:1:p:125-131
    DOI: 10.1016/j.eneco.2011.03.010
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    More about this item

    Keywords

    Oil prices; Oil production; OPEC; Cartel; Cointegration; Causality;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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