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| Author: | Greene, D. L. |
| Title: | A note on OPEC market power and oil prices. |
| Journal: | Energy Economics
1991 : APR, VOL. 13:2, p. 123-129 |
| Index terms: | OPEC OIL PRICES CARTELS |
| Language: | eng |
| Abstract: | A theory is presented that attempts to explain the objective economic forces that define the market power of the OPEC cartel. The short- and long-run monopoly price curves are presented as a function of OPEC's market share. Static model is used because oil is not a depletable resource, but is a normal good that can be produced with application of labour, capital, resources and technology. The theory implies that a rational, knowledgeable cartel will operate between its short-run and long-run monopoly price curves. The shapes of the curves depend on the world price elasticity for oil and on the supply response rate of competitive oil producers. |
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