OPEC’s market power: An empirical dominant firm model for the oil market
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Golombek, R., Irarrazabal, A.A., L. Ma
Working Paper no 3/14, Norges Bank Research
In this paper we estimate a dominant Örmñcompetitive fringe model for the crude oil market using quarterly data on oil prices for the 1986ñ2009 period. All the estimated structural parameters have the expected sign and are signiÖcant at standard test levels. We Önd 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.
L13, L22, Q31
Oil, dominant Örm, market power, OPEC, Lerner index, oil demand elasticity, oil supply elasticity