OPEC and the Crude Oil Market with Game Theory Applications by Alexandra Haen

Dublin Core

Title

OPEC and the Crude Oil Market with Game Theory Applications by Alexandra Haen

Subject

Economics

Description

The Organization of the Petroleum Exporting Countries (OPEC) has been a major player in the world market for crude oil ever since the organization’s formation in 1960. While there are oil-exporting countries that are not members of this organization, their production decisions and opportunities for profit have in the past been greatly affected by the decisions of OPEC. In the context of game theory, literature has struggled to determine the “rules of the game” regarding OPEC’s recent performance and the strategies its member countries are “playing”. This paper summarizes recent research and game theory analysis of the crude oil industry, discusses the Prisoner’s Dilemma game and applies it to the production and strategy options for each player, and calculates relative payoffs and total market output in a setting where Saudi Arabia acts as a Stackelberg leader. Additionally, the development of trigger strategies will be applied to OPEC’s current situation in an attempt to describe the subgame perfect equilibrium in which the member countries can sustain collusion.

Creator

Haen, Alexandra

Source

Senior Showcase Poster presentation

Publisher

Ripon College

Date

April 23, 2015

Rights

The author reserves all rights.

Format

pdf

Identifier

Majors: Economics, Business Management
Schofield, Wisconsin
ECO 346 - Game Theory for Business and Economics

Files

HaenPosterSession.pdf

Citation

Haen, Alexandra, “OPEC and the Crude Oil Market with Game Theory Applications by Alexandra Haen,” Senior Showcase Digital Collection, accessed October 17, 2018, https://rcseniorshowcase.omeka.net/items/show/7.

Output Formats

Social Bookmarking