OPEC Behavior: A Test of Alternative Hypotheses

Since interpretations of past and future oil price patterns depends on the model chosen, the author tests and compares alternative theories of OPEC as a first step in validating the choice on any one model. The results show that among OPEC countries, the partial market-sharing cartel model is the only model not rejected by at least some of the 11 members and gives the best explanation of production. In comparison with 11 non-OPEC countries, the competitive model could not be rejected for 10 of the 11 non-OPEC producers. This raises the question of why, if OPEC is a cartel, Friedman's predictions have not come true, and introduces new questions for future research. 19 references, 3 tables.