The capital-theoretic model suggested for determining the price- quantity combinations does not hold in the case of most natural resources, including petroleum, since the inelastic demand function would vitiate the optimal solution. The specification of a dynamic demand function, with necessary, attributes, no doubt, results in a valid optimal solution in period t, but that could be achieved only at the cost of sub-optimal solution in other periods. If the OPEC starts behaving as a discriminating monopoly, instead of as a pure monopoly, the optimal solution is assured in all markets and in all time periods.
Rao, Vaman, "The OPEC Oil-Pricing Policies" (1977). UMR-MEC Conference on Energy / UMR-DNR Conference on Energy. 314, pp. 492-496.
4th Annual UMR-DNR Conference on Energy (1977: Oct. 11-13, Rolla, MO)
Article - Conference proceedings
Energy Economics Pricing Strategies
© 1977 University of Missouri--Rolla, All rights reserved.
13 Oct 1977