OPEC and the rest of the world-trade equilibrium: a clarifying note

Journal Article · Fri Jan 01 04:00:00 EST 1982 · Energy J.; (United States)

DOI:https://doi.org/10.5547/ISSN0195-6574-EJ-Vol3-No1-7· OSTI ID:5560020

Fishelson, G

An analysis of world-trade equilibrium and its sensitivity to OPEC's pricing policies for the case of unitary elasticity of substitution between oil and labor in production suggests the need for technological progress to increase elasticities of substitution and the returns to scale towards unity. The diversion between the analytical results and reality suggests that the elasticities are constant only at long-run equilibrium. Hence, the calming result of a demand elasticity above unity cannot be used to lower the estimates of the cost of the rest of the world because of energy price increases by OPEC. Given the elasticity of substitution moving over time towards its long-run equilibrium, it is important for policymakers to find out when it reaches unity. 5 references.

• Research Organization: Tel Aviv Univ., Ramat Aviv, Israel
• OSTI ID: 5560020
• Journal Information: Energy J.; (United States), Journal Name: Energy J.; (United States) Vol. 3:1; ISSN ENJOD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
ECONOMIC ANALYSIS
ECONOMIC ELASTICITY
ECONOMICS
INTERNATIONAL ORGANIZATIONS
MONOPOLIES
OIL-EXPORTING COUNTRIES
OPEC
PRICES
TRADE