Bargaining, Strategic Reserves, and International Trade in Exhaustible Resources

Vincent Crawford, Joel Sobel and Ichiro Takahashi

American Journal of Agricultural Economics, 1984, vol. 66, issue 4, 472-480

Abstract: This paper proposes a framework for the analysis of optimal strategic reserve policy when ability to withstand embargoes influences terms of trade in an exhaustible resource like oil. The mode embodies two stylized facts: competitive forces are not always strong enough to eliminate other influences on the negotiated price of oil, and long-term contracts for oil delivery cannot be enforced across national boundaries. Some modeling issues that arise in this context are discussed, and a model of optimal strategic reserve policies is proposed and solved in a leading special case.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:66:y:1984:i:4:p:472-480.

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