Analyzing OPEC Members Behavior: A Cooperation Game Approach

In the past decades, a range of discussions has been formed on coalition theory in economics and international sciences. The focus of this discussion is that in the absence of a superior power, and while some players want to expand their authorities, is it possible to cooperate or not. These theories agree on the principle that if such condition be a sequential game, cooperation will be permanent only if the players are patient enough. In the real world, there are many partnerships between groups that don’t have a same patience, i.e. the discount factor isn’t equal for each of the members. OPEC is an example of those groups which composed of members with different discount factor. This paper investigates the future of OPEC members and their different discount factors. So, cooperative theory is used to analyze the behavior of OPEC members using panel data techniques. Results show that a fixed effects model is appropriate to explain OPEC member’s behavior. According to the model, the amount of marketed crude oil by members has positive relationship with stocks and sales in the previous period and also there is a negative relationship between the amount of marketed oil and square of proven reserves per capita. The results show that bargaining and negotiation between some members to achieve agreement rapidly and also relents or blackmails guarantees OPEC Survival.