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Cartel formation and oligopoly structure: a new assessment of the crude oil market

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  • Sabine Bockem

Abstract

While economic theorists regard OPEC as a perfect example of a long-lasting cartel, energy economists strongly deny such view. Applying the ideas of New Empirical Industrial Organization, a market description is derived. Cartel theory and empirical evidence fit together well. Stable long-lasting cartels can be explained only for subclasses of market models and exactly such type of model is obtained here. A variety of different market models is tested. OPEC and the market for crude oil is best described by a price-leader model.

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  • Sabine Bockem, 2004. "Cartel formation and oligopoly structure: a new assessment of the crude oil market," Applied Economics, Taylor & Francis Journals, vol. 36(12), pages 1355-1369.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:12:p:1355-1369
    DOI: 10.1080/0003684042000191093
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    References listed on IDEAS

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    1. Farzanegan, Mohammad Reza & Raeisian Parvari, Mozhgan, 2014. "Iranian-Oil-Free Zone and international oil prices," Energy Economics, Elsevier, vol. 45(C), pages 364-372.
    2. Luciano Fanti, 2017. "An Observable Delay Game with Unionised Managerial Firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(1), pages 50-69, February.
    3. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2010. "Financial market pressure, tacit collusion and oil price formation," Energy Economics, Elsevier, vol. 32(2), pages 389-398, March.
    4. Shantayanan Devarajan & Lili Mottaghi, "undated". "MENA Quarterly Economic Brief, July 2016," World Bank Publications - Reports 24684, The World Bank Group.
    5. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    6. Finn Roar Aune & Klaus Mohn & Petter Osmundsen & Knut Einar Rosendahl, 2007. "Industry restructuring, OPEC response - and oil price formation," Discussion Papers 511, Statistics Norway, Research Department.

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