Consuming nations can stockpile cartelized commodities to suppress prices in future periods. This analysis employs a multiperiod framework and simple concepts of game theory to asses stockpiling strategies by the government(s) of consuming nation(s) and pricing strategies by a cartel. Ultimate consumers are active, though nonstrategic, players in the game. The paper examines outcomes when discount rates, time horizons, resource constraints, and storage and production costs vary; when consuming nations do not cooperate fully; and when a consuming nation or a cartel can issue threats and promises. Both producers and consumers realize economic benefits from stockpiling in most of the cases that we investigate. Depletable resources are not considered except in an appendix. The net benefits of stockpiling constrained resources are problematical.
[1]
Basil A. Kalymon.
Economic incentives in OPEC oil pricing policy
,
1975
.
[2]
T. Schelling.
The Strategy of Conflict
,
1963
.
[3]
T. Schelling,et al.
The Strategy of Conflict.
,
1961
.
[4]
R. Zeckhauser,et al.
An economic theory of alliances
,
1966
.
[5]
Michael Kennedy,et al.
An Economic Model of the World Oil Market
,
1974
.
[6]
Robert L. Gustafson,et al.
Implications of Recent Research on Optimal Storage Rules
,
1958
.
[7]
C. Bergsten.
The Threat from the Third World
,
1973
.