OPEC is not a cartel: a property rights explanation of the rise in crude oil prices

Thesis/Dissertation · Sun Jan 01 04:00:00 EST 1978

OSTI ID:6382076

Johany, A D

The question asked is whether international oil prices reflect only the behavior of the individual oil-producing countries, acting as wealth maximizers, or whether it reflects the monopoly power that OPEC exercises. The tools of analysis used to answer this query are standard oligopoly theory and capital theory as applied to natural resources and liquid assets. A simple probabilistic model that showed the huge differences between the rates of discount of the oil companies (reflecting their increasing uncertainty about their property rights in crude oil) on one hand and those of the host countries, on the other, was developed. The conclusion is this: cartels that are able to earn monopoly profits for their members are inherently unstable. If OPEC was a cartel, it would have been no exception. The main reason the price of oil has risen sharply since the end of 1973 is that the property rights in crude oil have changed, rather than that the members of OPEC have colluded to monopolize the oil market.

• OSTI ID: 6382076
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
021000 -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294002* -- Energy Planning & Policy-- Petroleum
CARTELS
CHARGES
ENERGY SOURCES
FOSSIL FUELS
FUELS
GLOBAL ASPECTS
INDUSTRY
INTEREST RATE
INTERNATIONAL ORGANIZATIONS
MATHEMATICAL MODELS
OIL-EXPORTING COUNTRIES
OPEC
PETROLEUM
PETROLEUM INDUSTRY
PROPERTY RIGHTS