A general equilibrium model of trilateral trade with oil duopoly
I study the economic implications of the world oil market dominated by OPEC and non-OPEC major oil producing countries using a general equilibrium model of trilateral trade with oil duopoly. There are three countries and three goods, x, y, and oil (z). Home (H) is endowed with good x . Foreign (F) i...
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Format: | Article |
Language: | English |
Published: |
Emerald Publishing
2008-12-01
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Series: | Journal of International Logistics and Trade |
Online Access: | https://www.emerald.com/insight/content/doi/10.24006/jilt.2008.6.2.23/full/pdf |
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author | Koo Woong Park |
author_facet | Koo Woong Park |
author_sort | Koo Woong Park |
collection | DOAJ |
description | I study the economic implications of the world oil market dominated by OPEC and non-OPEC major oil producing countries using a general equilibrium model of trilateral trade with oil duopoly. There are three countries and three goods, x, y, and oil (z). Home (H) is endowed with good x . Foreign (F) is endowed with good y and also produces oil (z). Middle (M) is an oil producing country and supplies oil only. I consider two types of oil market structure; (1) Cournot duopoly and (2) perfect competition. I find that Foreign is actually worse off under Cournot duopoly despite being a duopolist for wide range of parameter values that reflect real world situations. This is mainly due to reduced consumption of oil and reduced value of good y endowment under duopoly when Foreign is a net oil exporter or oil autarky, and is also due to worsening terms-of-trade effect under duopoly when Foreign is a net oil importer. Welfare reversal with higher welfare of Foreign under oil duopoly occurs only under highly unrealistic parameter values, and hence the main results of the study remain robust. |
first_indexed | 2024-03-11T06:38:54Z |
format | Article |
id | doaj.art-718853b68fc7435c93faf9b4cadc030b |
institution | Directory Open Access Journal |
issn | 1738-2122 2508-7592 |
language | English |
last_indexed | 2024-03-11T06:38:54Z |
publishDate | 2008-12-01 |
publisher | Emerald Publishing |
record_format | Article |
series | Journal of International Logistics and Trade |
spelling | doaj.art-718853b68fc7435c93faf9b4cadc030b2023-11-17T10:43:18ZengEmerald PublishingJournal of International Logistics and Trade1738-21222508-75922008-12-0162234810.24006/jilt.2008.6.2.23A general equilibrium model of trilateral trade with oil duopolyKoo Woong Park0BK21, Department of Economics Seoul National University 599 Gwanak-ro, Gwanak-gu, Seoul, 151-742, KoreaI study the economic implications of the world oil market dominated by OPEC and non-OPEC major oil producing countries using a general equilibrium model of trilateral trade with oil duopoly. There are three countries and three goods, x, y, and oil (z). Home (H) is endowed with good x . Foreign (F) is endowed with good y and also produces oil (z). Middle (M) is an oil producing country and supplies oil only. I consider two types of oil market structure; (1) Cournot duopoly and (2) perfect competition. I find that Foreign is actually worse off under Cournot duopoly despite being a duopolist for wide range of parameter values that reflect real world situations. This is mainly due to reduced consumption of oil and reduced value of good y endowment under duopoly when Foreign is a net oil exporter or oil autarky, and is also due to worsening terms-of-trade effect under duopoly when Foreign is a net oil importer. Welfare reversal with higher welfare of Foreign under oil duopoly occurs only under highly unrealistic parameter values, and hence the main results of the study remain robust.https://www.emerald.com/insight/content/doi/10.24006/jilt.2008.6.2.23/full/pdf |
spellingShingle | Koo Woong Park A general equilibrium model of trilateral trade with oil duopoly Journal of International Logistics and Trade |
title | A general equilibrium model of trilateral trade with oil duopoly |
title_full | A general equilibrium model of trilateral trade with oil duopoly |
title_fullStr | A general equilibrium model of trilateral trade with oil duopoly |
title_full_unstemmed | A general equilibrium model of trilateral trade with oil duopoly |
title_short | A general equilibrium model of trilateral trade with oil duopoly |
title_sort | general equilibrium model of trilateral trade with oil duopoly |
url | https://www.emerald.com/insight/content/doi/10.24006/jilt.2008.6.2.23/full/pdf |
work_keys_str_mv | AT koowoongpark ageneralequilibriummodeloftrilateraltradewithoilduopoly AT koowoongpark generalequilibriummodeloftrilateraltradewithoilduopoly |