The Organization of Petroleum Exporting Countries (OPEC) is a cartel that attempts to keep oil prices high

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The Organization of Petroleum Exporting Countries (OPEC) is a cartel that attempts to keep oil prices high by restricting output. As part of that process, each member nation is assigned a production quota; most members have nationalized their oil industry so that the government controls overall production. However, member nations routinely exceed their production targets. Read “What Makes Collusion Easier” in Section 11.2, then explain why OPEC often has difficulty keeping output low and prices high. Do you think that violators are more likely to emerge from politically stable countries, or unstable countries? From monarchies or democracies?

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Microeconomics

ISBN: 9781319105563

3rd Edition

Authors: Austan Goolsbee, Steven Levitt, Chad Syverson

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