OPEC and the international oil market: Can a cartel fuel the engine of economic development?

Noguera, Jose; Pecchecnino, Rowena A.

doi:10.1016/j.ijindorg.2006.04.010

Cited by 13 publications

(8 citation statements)

References 21 publications

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“…Furthermore, taking into account that the decision variable of the cartel is the production quotas, the results suggest that the goal of economic growth is far from being guaranteed. This result is in line with that achieved, for example, by Noguera and Pecchenino (2007). This finding is consistent with market failures caused by the resource curse, given that the abundance of resources and rents hampers the development of non-oil activities, preferably tradable goods, in these countries.…”

Section: Evidence From Opec Countriessupporting

confidence: 90%

“…During this period, the oil market was very stable and the cartel strategy apparently worked. With the volatility observed after the 1970s, Noguera and Pecchenino (2007) argue that the objective of long-run growth and development may not be accomplished acting only through the profit-oriented pricing policy. In the current context of high volatility of oil prices, and as OPEC is looking for high-current profits, the constant streams of revenue hampers the deployment of other sectors and alternative investments.…”

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confidence: 99%

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Does oil consumption promote economic growth in oil producers?

Fuinhas

Marques

Quaresma

2015

IJESM

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Purpose The oil-growth nexus is studied in a panel of Organization of the Petroleum Exporting Countries (OPECs), for a long time span (1960-2011), controlling for the specific context of oil production. Their membership in the cartel put them under a common guidance, which originates phenomena of cross-section dependence/contemporaneous correlation in the panel. Design/methodology/approach Recent panel data estimators and co-integration analyses are both pursued and discussed, namely, dealing with the heterogeneity of panels and the countries’ specific effects. The Driscoll–Kraay estimator proves to be appropriate in handling the panel properties. Findings Full understanding of the oil-growth nexus requires the short- and long-run effects to be broken down. The growth hypothesis was found only in the short run. The results suggest the presence of the resource curse phenomenon and prove that the cartel’s long-run growth goal could not being fully accomplished. Actually, both oil production and prices are not promoting economic growth in OPEC countries. Originality/value The focus is on a group of countries which, besides being oil exporters, have an institutional connection between them, i.e. the OPEC cartel. The paper also contributes by framing the relationship between oil consumption and economic growth within a context of countries that are primary energy producers. Additionally, the paper uses a novel econometric approach and a long time span (52 years) not tested.

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Section: Evidence From Opec Countriessupporting

confidence: 90%

mentioning

confidence: 99%

Does oil consumption promote economic growth in oil producers?

Fuinhas

Marques

Quaresma

2015

IJESM

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“…According to McGahan Competitive advantage and Porter (1997), the sustainability of such rents is closely linked to the industry structure, which changes relatively slowly (see also Porter, 1991). In order to gain market power over their rivals, competing companies may form cartels (Noguera and Pecchecnino, 2007) or enter into collusive agreements (Porter, 2005), both of which could be seen as forms of interfirm cooperation within the IOE framework. Therefore, from the IOE perspective, interfirm cooperation is a source of a more favorable market position and related market power.…”

Section: Industrial Organization Economicsmentioning

confidence: 99%

“…In order to gain market power over their rivals, competing companies may form cartels (Noguera and Pecchecnino, 2007) or enter into collusive agreements (Porter, 2005), both of which could be seen as forms of interfirm cooperation within the IOE framework. Therefore, from the IOE perspective, interfirm cooperation is a source of a more favorable market position and related market power.…”

Section: Competitive Advantage and Interfirm Cooperation – Theoretical Explanationsmentioning

confidence: 99%

Competitive advantage in interfirm cooperation: old and new explanations

Ritala

Ellonen

2010

Competitiveness Review: An International Business Journal

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Purpose -The purpose of this paper is to examine how different strategy theories complement each other with respect to understanding competitive advantage of a single firm that utilizes interfirm cooperation. Design/methodology/approach -The paper provides an analytical review of three schools of strategy research in order to highlight their contributions, shortcomings, and interrelations with respect to sustainable competitive advantage and to clarify their explanations of competitive advantage in interfirm cooperation. On the basis of this analysis, an integrated perspective that captures industry, organization, and relationship attributes is proposed. Findings -The paper suggests that old and new paradigms in strategic management (industrial organization economics, resource-based theories, and the relational view) are applicable alongside each other when analyzing how a single firm gains competitive advantage by utilizing interfirm cooperation. It is argued here that no paradigm can be used to substitute others and thus an integrated perspective is needed. The paper provides a discussion and implications on how each paradigm complements others and illustrate this by sketching a refined strengths, weaknesses, opportunities, threats (SWOT) analysis framework. Practical implications -The paper gives a practical implication for managers who utilize traditional SWOT analysis in their decision making. By including relationship potential and limitations to the conceptual toolbox of thinking strategy through SWOT, managers can gain additional insight into internal strengths and weaknesses and external opportunities and threats analysis. Originality/value -The study increases understanding on how prevailing perspectives on competitive advantage can be used in analyzing interfirm cooperation.

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“…a stable oil price in the markets) and macroeconomic (i.e. economic development of members by ensuring a fair price) (Noguera and Pecchecnino, 2007). Achieving these twin objectives therefore involves the use of political powers -as evident in production allocation decisions based on quota system and by virtue of the members' reserves (i.e.…”

Section: Introductionmentioning

confidence: 99%

Cheating behaviour among OPEC member-states and oil price fairness and stability: an empirical analysis

Ibrahim

Omoteso

2022

IJGEI

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Within the context of a target oil price band regime, this paper posits that cheating behaviour in OPEC has ethical and accountability implications for the organisation. It also impacts on its reputation and ability to ensure stable and fair oil prices in the oil markets. Based on data sets covering the period from 2000 to 2012 (i.e. production quota era), analysed using the Vector Auto-Regression/Vector Error Correction (VAR-VEC) framework, the study's results indicate that OPEC cheating, mainly instigated by the amount of spare production capacity available to OPEC members, does not seem to have a significant direct effect on international oil prices. However, the degree of cheating by OPEC member-states might disrupt its ability to maintain surplus capacity enough to reduce price speculation in the oil markets. Should cheating behaviour in OPEC continue unabated, this could jeopardise an effective energy regulatory framework and market transparency. The paper, therefore, recommends a policy action in OPEC to support the redesigning of the existing quota system that is fair and just to its members and capable of controlling any cheating behaviour.

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OPEC and the international oil market: Can a cartel fuel the engine of economic development?

Cited by 13 publications

References 21 publications

Does oil consumption promote economic growth in oil producers?

Does oil consumption promote economic growth in oil producers?

Competitive advantage in interfirm cooperation: old and new explanations

Cheating behaviour among OPEC member-states and oil price fairness and stability: an empirical analysis

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