Is OPEC a (successful) cartel?

The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Nowadays the international organisation counts 14 Members. OPEC’s mission is: to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure anContinue reading “Is OPEC a (successful) cartel?”

Is economics helpful when it comes to cartels?

Economics implies that cartels are inherently unstable and so should be short-lived because they price above the Nash equilibrium. However, the evidence is cartels are often long-lived. When players interact for an infinite number of times, as do firms in real markets, they can escape the short-run Nash equilibrium of the Prisoner Dilemma. In theContinue reading “Is economics helpful when it comes to cartels?”