CEU Electronic Theses and Dissertations, 2007
| Author | Haita, Corina Madalina |
|---|---|
| Title | Game Theoretic Modeling of the World Oil Market The Russian Gains from Strategic Behavior |
| Summary | In this thesis I employ a stylized static oligopoly model of the world oil market in two versions differentiated by the behavior of Russia. In the first version Russia is regarded as a price-taker together with the fringe producers and OPEC is a partial monopolist. In the second version, Russia is a strategic player in a quantity leadership game with OPEC, with the fringe producers behaving competitively. The aim of this thesis is to quantitatively compare the Russian profits in these two behavioral situations. I use multiplicative functional forms for global oil demand and fringe supply, excepting Russia and I construct marginal cost functions for the two main players from the best data available. I use the price elasticities of global oil demand and fringe supply as exogenous parameters, and I solve the models for different combinations of such elasticities. Finally, I compare quantitatively the outcome of the models from the Russian gains point of view. I show that Russia should be indifferent between being a price-taker and behaving strategically, as the gains from the strategic behavior are very low, below 1%. Nevertheless, Russia is able to save some resources, for its supply is on average with 50,000 barrels/day lower in the strategic case. In addition, I show that the price increases in the strategic version of Russia’s behavior as compared with the price-taking version. Furthermore, OPEC is always more better-off than Russia when the latter plays strategically. |
| Supervisor | Andrzej Baniak |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2007/c05hac01.pdf |
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