OPEC’s market power: An Empirical Dominant Firm Model for the Oil Market

Rolf Golombek, Alfonso A. Irarrazabal, Lin Ma

Memo 21/2015

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 signifi…cant. We fi…nd 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.

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Published Dec. 17, 2015 2:39 PM - Last modified Jan. 29, 2019 5:08 AM