Oil cartels, economic growth, and inequality

John R. Heilbrunn

Chapter 12 in Elgar Companion on Inequality and Natural Resources, 2026, pp 263-278 from Edward Elgar Publishing

Abstract: This chapter argues that in oil exporting countries production concentrates wealth in cartels. Because the oil sector includes a small number of firms, oligopoly is a common strategy to increase profits. In oligopolistic circumstances, a country's population receives little of the resource wealth. Hence, while wealth creation is a consequence of hydrocarbon production, it deepens inequalities. In effect, oil production increases a country's capital stocks, yet has a negligible impact on income inequalities. Several reasons account for this outcome, including mismanagement of resource revenues, low levels of fiscal legibility, poor governance, and high levels of corruption. The chapter presents its argument by looking at the political economy of cartels, historical experiences among oil monopolies, efforts to regulate oil production, and strategies to distribute resource revenues to the larger population with a goal of reducing income inequalities. Policy implications include a consideration of oligopoly, antitrust, and governance reforms.

Keywords: Cartels; Development; Inequalities; Monopoly; Oligopoly; Oil; Petroleum; Resource Rents (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327362
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