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Frugals, Militants and the Oil Market

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  • Billette de Villemeur, Etienne
  • Pineau, Pierre-Olivier

Abstract

The oil market has often been modelled as an oligopoly where the strategic players are producers. With climate change, a new sort of game appeared, where environmental militants play a significant role by opposing some projects, to contain oil production. At the same time, consumers continue to use increasing amounts of oil, independently of oil price fluctuations. Should we oppose oil project, reduce demand or both? We investigate in this paper the double prisoner's dilemma in which individuals find themselves, with respect to oil consumption and their environmental stance towards the oil industry. We find that the collective outcome of such game is clearly better when a frugal behaviour is adopted, without being militant. The Nash equilibrium, resulting from the individual strategies, leads by contrast to the worst possible outcome: high prices, high consumption and high environmental impact. An effective environmental action should avoid opposing oil supply sources (a costly militant act) and help consumers becoming more frugal.

Suggested Citation

  • Billette de Villemeur, Etienne & Pineau, Pierre-Olivier, 2018. "Frugals, Militants and the Oil Market," MPRA Paper 88933, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88933
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    References listed on IDEAS

    as
    1. Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2017. "A meta-analysis on the price elasticity of energy demand," Energy Policy, Elsevier, vol. 102(C), pages 549-568.
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    More about this item

    Keywords

    Oil Market; Militants; Frugality;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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