World crude oil and natural gas: a demand and supply model

Krichene, Noureddine

doi:10.1016/s0140-9883(02)00061-0

Cited by 297 publications

(153 citation statements)

References 11 publications

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“…In this price range the demand elasticity is greater than at the price cap, and closer to −1, but smaller than −1 in absolute value. Thus, for the prices observed in our experiment, the demand elasticity is bounded by the short-run and long-run estimates of Krichene (2002) study. The parameter b is set sufficiently large, so that market demand would not grow too large over the 30 periods; otherwise network users would have to bid for too many units of capacity and the experiment would slow down.…”

Section: C1 Price Cap and Capacity Cost P Cap And Cmentioning

confidence: 58%

Regulation of network infrastructure investments: an experimental evaluation

2012

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This paper reports the results of an experiment evaluating three regulatory schemes for network infrastructure, in terms of their ability to generate efficient levels of capacity investment. We compare the performance of (1) price cap regulation, (2) a regulatory holiday for new capacity, and (3) price cap regulation with long term contracts combined with a secondary market. The setting is one in which network users can benefit from acting strategically, and are better informed than the network operator about demand growth. We find that the regulatory holiday creates an incentive to underinvest relative to optimal levels. Long term contracts also fail to improve on single price-cap regulation, and may reduce investment by providing noisier signals about future demand.

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Section: C1 Price Cap and Capacity Cost P Cap And Cmentioning

confidence: 58%

Regulation of network infrastructure investments: an experimental evaluation

2012

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“…Fossil-fuel resources are tied to the respective resource production sectors. The elasticities of substitution in fossil fuel sectors are calibrated to match exogenous estimates of fossil fuel supply elasticities (Graham et al, 1999;Krichene, 2002).…”

Section: Non-technical Model Summarymentioning

confidence: 99%

The efficiency cost of protective measures in climate policy

et al. 2017

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“…Elasticities are taken from the literature (Krichene, 2002;Gately and Huntington, 2002;Dahl and Sterner, 1991): long-term OECD demand and income elasticities are set to -0.7 and 0.56, respectively, whereas non-OECD demand and income elasticities are set to -0.4 and 0.53, respectively.…”

Section: Scenarios Data and Algorithmmentioning

confidence: 99%

Imperfect Cartelization in OPEC

Okullo

Reynès

2016

SSRN Journal

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A model of global oil production is applied to study cartelization by OPEC countries. Writing out the shadow price on quota allocations so as to draw correspondence to coefficients of cooperation (Cyert et al. 1973), we examine the incentives that different OPEC members to collude. We find that heterogeneity in OPEC and the supplies of the non-OPEC fringe create strong incentives against OPEC cooperation. OPEC's optimal supply strategy although observed to be substantially more restrictive than that of a Cournot-Nash oligopoly, is found to still be more accommodative than that of a perfect cartel. The strategy involves allocating larger than proportionate quotas to smaller and relatively costlier producers as if to bribe their participation in the cartel. This is contrary to predictions of the standard cartel model that such producers should be allocated relatively more stringent quotas.Furthermore, we find that cartel collusion is likely to be sustained for elastic than inelastic demand. Since global oil demand is well known to be inelastic, this observation provides another structural explanation for why OPEC behavior is inconsistent with that of a perfect cartel. Our study points to multiple headwinds that limit OPECs ability to raise long-run global oil prices.

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World crude oil and natural gas: a demand and supply model

Cited by 297 publications

References 11 publications

Regulation of network infrastructure investments: an experimental evaluation

Regulation of network infrastructure investments: an experimental evaluation

The efficiency cost of protective measures in climate policy

Imperfect Cartelization in OPEC

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