The Failure of OPEC to Secure Economic Rents

  • Coby van der Linde
Part of the Studies in Industrial Organization book series (SIOR, volume 23)

Abstract

Since 1973, OPEC has been markedly less successful in reconciling the individual and collective interests of the member states. Differences in oil reserves, production capacity, dependence on oil income and the degree of vertical integration have brought conflicting interests to light concerning price and production levels. At the same time, the international oil market has been undergoing major changes. As a result of these internal difficulties and oil market developments, OPEC has become increasingly unable to secure the lion’s share of the economic rents for its member states. The organization was further strained when the weaker OPEC countries experienced difficulties in financing their new rounds of investment in the oil industry. They were increasingly looking for foreign investments to fill the financing gap. However, attracting foreign investment becomes easier if agreements within OPEC to limit production are abandoned. However, as a result of more private investment, the downside of reducing state control over the industry in the member states is that the position of OPEC to regulate the market will be further weakened.

Keywords

Economic Crisis Europe Petroleum Income Nash 

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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Coby van der Linde
    • 1
    • 2
  1. 1.Netherlands Institute of International Relations ‘Clingendael’The Netherlands
  2. 2.Leiden UniversityThe Netherlands

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