ABSTRACT
Organization of the Petroleum Exporting Countries (OPEC) quotas are irregularly applied, frequently ignored by its members, and have at most a modest effect on actual production. Probably Saudi Arabia has market power. One might say that OPEC probably has market power because it includes Saudi Arabia, but only in that sense; the findings in this paper undermine the idea that the OPEC as an organization per se manipulates the world oil supply. K. Hyndman asserts, ‘OPEC is obviously a cartel that restricts output in order to obtain super-competitive profits,’ an assertion shared by other economists. Many observers note that cheating on OPEC quotas is widespread but pay less attention to other problems that might be even more important, such as the extent to which OPEC sets targets that are actually different from what an actor would have done counterfactually. OPEC appears to be an important case within the category of international regimes that have outlived their original mandates.
