Feasibility study of the pricing of crude oil by OPEC and OECD countries using game theory in the form of a win– win

Subject Areas : Journal of Investment Knowledge

Reza Fahimi Doab ¹ , Ahmad Sabahi ² , M. H. Mahdavi Adeli ³ , Ahmad Seyfi ⁴

1 - Author and Phd Student of Economics Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad
2 - Associate Professor of Economics, Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad
3 - Professor of Economics, Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad
4 - Faculty member of Economic and Administrative Sciences, Ferdowsi University of Mashhad

Received: 2013-07-11 Accepted : 2013-12-11 Published : 2013-12-11

Keywords: crude oil market, OPEC Organization and the OECD, bilateral monopoly, Game theory, a model of Johansen - Juselius, simultaneous equation system a,

Abstract :

In international economy, countries are specially importer or pure supplier of crude oil .The OECD and OPEC are the organizations that respectively are considered as the most importer and exporter of crude oil in the world and therefore have a significant role in determining the oil price .This paper examines the impact strength of each of the organization on the price of crude oil and also estimate the relative bargaining power for determining the price of oil in the game bilateral monopoly market model similar to the prisoners dilemma game model to describe the situation on the oil market between the two organization is presented. In this model ,the price extend in a moment is depend on player bargaining power and player wait rates. In this research, set to empirical and econometric models by using data from 1980 to 2012 and also use the same pattern johansen – juselius and the simultaneous equation system approach. Finding of this research suggest in OECD oil bazaar bargaining power is high and in compare with OPEC received more welfare also, it is possible to design win - win game model based on Rising mutual benefit trade. but because of uncoordinated and heterogeneous character of OPEC,the model cannot be considered as a long term and stable cooperative game