Theory of international trade with an international cartel or a centrally planned economy

Journal Article · Thu Jan 01 04:00:00 EST 1976 · South. Econ. J.; (United States)

DOI:https://doi.org/10.2307/1056615· OSTI ID:7269667

Batra, R N

Maintenance of an oil stockpile and the formation of a Federal corporation to import oil from the Organization of Petroleum Exporting Countries (OPEC) can be justified, because the country with the greatest economic ''muscle'' can impose its own terms on trading partners. Conclusions reached by applying the standard tools of trade theory to decision-making in a centralized economy (e.g., OPEC) are that: (1) the central planner acts like individuals in a decentralized economy if there is no monopoly; (2) if there is a monopoly and trade occurs with a market economy (e.g., U.S.), the central planner's position is undefined, and the best policy for a market economy is not clear; and (3) if trade is with another central economy, trade terms are settled through bilateral bargaining by the central planners. Thus, in order to keep the central planner from exploiting this country's monopoly power, the market economy should act as a central planner. Considering the oil situation, perhaps the U.S. should trade with OPEC at the state level rather than allowing individual firms to make trade deals. These observations can be extended to other vital resources, which may be subject to future cartels. (8 references) (DCK)

• Research Organization: Southern Methodist Univ., Dallas
• OSTI ID: 7269667
• Journal Information: South. Econ. J.; (United States), Journal Name: South. Econ. J.; (United States) Vol. 42:3; ISSN SECJA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294002 -- Energy Planning & Policy-- Petroleum
BEHAVIOR
ECONOMICS
ENERGY SOURCES
FOSSIL FUELS
FUELS
GOVERNMENT POLICIES
INTERNATIONAL COOPERATION
INTERNATIONAL ORGANIZATIONS
MARKET
MATHEMATICAL MODELS
OPEC
PETROLEUM
TAXES
TRADE