OPECís market power: An Empirical Dominant Firm Model for the Oil Market
(), Alfonso A. Irarrazabal
() and Lin Ma
Abstract: We estimate a dominant firm-competitive fringe model for
the crude oil market using quarterly data on oil prices for the 1986-2009
period. All estimated structural parameters have the expected sign and are
significant. We find that OPEC exercised market power during the sample
period. Counterfactual experiments indicate that world GDP is the main
driver of long-run oil prices, however, supply (depletion) factors have
become more important in recent years.
Keywords: Oil; dominant firm; market power; OPEC; Lerner index; oil demand elasticity; oil supply elasticity; (follow links to similar papers)
JEL-Codes: L13; L22; Q31; (follow links to similar papers)
48 pages, December 17, 2015
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