ABSTRACT
This chapter presents some key facts about the oil and gas sectors in Argentina after the abandonment of the currency board system in 2002. It also presents self-enforcing equilibrium model with the analysis. The chapter explains the main results concerning the equilibrium characterization of the model. It provides several policy implications coming from the equilibrium analysis of the model. Argentina is an example of a country traditionally specialized in the production of agricultural commodities those also developed relatively important energy-related, non-renewable resources, mainly, oil and gas. Upstream firms produce a non-renewable resource that is used as the only input to produce a final consumption good called energy, produced by a downstream firm. Consumers have an active role in the political process that implicitly determines the regulations. The equilibrium notion in this model captures some dimensions of well-known political processes that characterize several emerging markets countries such as Argentina, considered relevant for the analysis of state intervention in the exhaustible-resources sector.
