IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v85y2020ics0140988319303925.html
   My bibliography  Save this article

Monopoly power in the oil market and the macroeconomy

Author

Listed:
  • Branger, Nicole
  • Flacke, René Marian
  • Gräber, Nikolai

Abstract

This paper studies the macroeconomic consequences of oil price shocks caused by innovations in the monopoly power in the oil market. Monopoly power is interpreted as oil producers' ability to charge a markup over marginal costs. We propose a novel way to identify markup shocks based on meetings of the OPEC and show their unique macroeconomic consequences compared to supply and demand shocks. In particular, global real economic activity expands when oil producers' monopoly power rises. A general equilibrium model suggests that higher monopoly profits attract investments in oil producing capital which drive down marginal costs and stimulate economic growth.

Suggested Citation

  • Branger, Nicole & Flacke, René Marian & Gräber, Nikolai, 2020. "Monopoly power in the oil market and the macroeconomy," Energy Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303925
    DOI: 10.1016/j.eneco.2019.104597
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988319303925
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2019.104597?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yang, Zhenbing & Shi, Qingquan & Lv, Xiangqiu & Shi, Qi, 2022. "Heterogeneous low-carbon targets and energy structure optimization: Does stricter carbon regulation really matter?," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 329-343.
    2. Diego R. Känzig, 2021. "The Macroeconomic Effects of Oil Supply News: Evidence from OPEC Announcements," American Economic Review, American Economic Association, vol. 111(4), pages 1092-1125, April.
    3. Bei Zhang & Xiaoqing Ai & Xingming Fang & Shi Chen, 2022. "The Transmission Mechanisms and Impacts of Oil Price Fluctuations: Evidence from DSGE Model," Energies, MDPI, vol. 15(16), pages 1-20, August.
    4. Clemens, Marius & Röger, Werner, 2024. "What is the difference between fossil fuel embargo and price shocks?," Energy Economics, Elsevier, vol. 132(C).
    5. Rausser, Gordon & Stuermer, Martin, 2020. "A Dynamic Analysis of Collusive Action: The Case of the World Copper Market, 1882-2016," MPRA Paper 104708, University Library of Munich, Germany.
    6. Kęstutis Peleckis, 2022. "Application of the Fuzzy VIKOR Method to Assess Concentration and Its Effects on Competition in the Energy Sector," Energies, MDPI, vol. 15(4), pages 1-16, February.
    7. Dimos Chatzinikolaou & Charis Michael Vlados, 2024. "International Political Economy, Business Ecosystems, Entrepreneurship, and Sustainability: A Synthesis on the Case of the Energy Sector," Sustainability, MDPI, vol. 16(22), pages 1-24, November.
    8. Mirosław Wasilewski & Serhiy Zabolotnyy & Dmytro Osiichuk, 2021. "Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies," Energies, MDPI, vol. 14(21), pages 1-20, November.

    More about this item

    Keywords

    Monopoly; OPEC; Oil shocks; VAR; DSGE; Real business cycle;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303925. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.