OPEC's market power: An empirical dominant firm model for the oil marketorecasting recessions in real time

Rolf Golombek, Alfonso A. Irarrazabal () and Lin Ma ()
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Alfonso A. Irarrazabal: Norges Bank (Central Bank of Norway), http://www.norges-bank.no/
Lin Ma: Norwegian University of Life Sciences (NMBU)

No 2014/03, Working Paper from Norges Bank

Abstract: In this paper we estimate a dominant firm-competitive fringe model for the crude oil market using quarterly data on oil prices for the 1986-2009 period. All the estimated structural parameters have the expected sign and are significant at standard test levels. We find that OPEC exercised its market power during the sample period. Counterfactual experiments indicate that world GDP is the main driver of long-run oil prices, however, supply (depletion) factors have become more important in recent years.

Keywords: Oil; Dominant firm; Market power; OPEC; Lerner index; Oil deman elasticity; oil supply elasticity (search for similar items in EconPapers)
JEL-codes: L13 L22 Q31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-02-24
New Economics Papers: this item is included in nep-bec, nep-com and nep-ene
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2014_03

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