TY - JOUR
T1 - OPEC in the epoch of globalization
T2 - An event study of global oil prices
AU - Bina, Cyrus
AU - Vo, Minh
PY - 2007
Y1 - 2007
N2 - This article confirms that OPEC is neither a cartel nor exhibits any sign of market domination, market control, or monopoly. This confirmation is also in accord with the pioneering account of the competitive differential oil rents formed across the global industry since the crises of the 1970s. The methodology utilized in this study is known as the event-study, an innovative econometric method which attempts to investigate the possible influence of OPEC decisions on output upon the global oil spot and futures prices during the period of 1983-2005. The significance of this investigation is due to the fact that the apparent "lumpiness" of OPEC has to have no bearing on a priori acceptance of "perfect competition" as opposed to "imperfect competition" - a tautological hallmark of neoclassical theory utilized in the bulk of both orthodox and heterodox literature on oil. And, by implication, neither has the neoclassical parlance of rent, as "market imperfection" and/or "market power," any bearing on the globally competitive differential oil rents earned by the rentier states. OPEC is reflective of the competitive differential oil rents earned by its members; and, contrary to both the right and the left, and their obfuscating echo in the media, it rolls with the heavy-handed punches of global market in the present epoch. This study is rather a posteriori investigation that deals with the reality of competition in the Schumpeterian framework - a reality that, far from the fiction of textbook competition, is neither perfect nor imperfect.
AB - This article confirms that OPEC is neither a cartel nor exhibits any sign of market domination, market control, or monopoly. This confirmation is also in accord with the pioneering account of the competitive differential oil rents formed across the global industry since the crises of the 1970s. The methodology utilized in this study is known as the event-study, an innovative econometric method which attempts to investigate the possible influence of OPEC decisions on output upon the global oil spot and futures prices during the period of 1983-2005. The significance of this investigation is due to the fact that the apparent "lumpiness" of OPEC has to have no bearing on a priori acceptance of "perfect competition" as opposed to "imperfect competition" - a tautological hallmark of neoclassical theory utilized in the bulk of both orthodox and heterodox literature on oil. And, by implication, neither has the neoclassical parlance of rent, as "market imperfection" and/or "market power," any bearing on the globally competitive differential oil rents earned by the rentier states. OPEC is reflective of the competitive differential oil rents earned by its members; and, contrary to both the right and the left, and their obfuscating echo in the media, it rolls with the heavy-handed punches of global market in the present epoch. This study is rather a posteriori investigation that deals with the reality of competition in the Schumpeterian framework - a reality that, far from the fiction of textbook competition, is neither perfect nor imperfect.
KW - Cartel
KW - Competition
KW - Differential oil rent
KW - Event study
KW - Global oil market
KW - OPEC
KW - Rentier state
KW - Volatility
UR - http://www.scopus.com/inward/record.url?scp=33847133947&partnerID=8YFLogxK
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U2 - 10.2202/1524-5861.1236
DO - 10.2202/1524-5861.1236
M3 - Article
AN - SCOPUS:33847133947
SN - 1524-5861
VL - 7
JO - Global Economy Journal
JF - Global Economy Journal
IS - 1
M1 - 2
ER -