OPEC is not a cartel

Journal Article · Sat Oct 31 23:00:00 EST 1981 · Challenge; (United States)

DOI:https://doi.org/10.1080/05775132.1981.11470722· OSTI ID:5836920

Plaut, S E

OPEC behavior is closer to that of an oligopoly than a cartel, which restricts supply and allocates output, because OPEC has never controlled either world supply or consumption. This group of producers has enough strength in the world market, however, to set prices higher than a competitive market price based on marginal costs, and the real question is why they do not lower production and charge still higher prices in order to extend their producing capacity. Saudi Arabia, OPEC's price leader and largest producer, is the moderating force that reflects that country's unique economic role in OPEC. Efforts to model OPEC decision making misunderstand how OPEC is structured and how it operates. The oligopolistic concept, with Saudi Arabia operating as the leading firm, is more appropriate than crediting Saudi Arabia with political moderation or conservatism. 1 table. (DCK)

• Research Organization: Israel Inst. of Tech., Haifa
• OSTI ID: 5836920
• Journal Information: Challenge; (United States), Journal Name: Challenge; (United States) Vol. 24:5; ISSN CHLGB
• 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
ASIA
BEHAVIOR
CARTELS
DECISION MAKING
ECONOMIC POLICY
GOVERNMENT POLICIES
INTERNATIONAL ORGANIZATIONS
MARKET
OIL-EXPORTING COUNTRIES
OPEC
SAUDI ARABIA