ABSTRACT
The world markets for gas and oil consist mainly of a small number of large sellers and buyers. For instance, the U.S. Energy Information Administration reports that the major energy exporters are concentrated in the Middle East and Russia, whereas the United States, Japan, and China have a substantial share in the imports. 1 These data suggest that bilateral monopoly roughly prevails in the oil market in which both parties exercise market power. What are the implications of market power for the welfare of importing and exporting countries, and the world?
