The Effects of Property Rights on Utilization of Oil Resources

The purpose of this study is to investigate the effects of public ownership of oil resources on utilization of the resources in Iran. Using new institutional economic approach, in particular property right approach, the behavior of policy making institutions within Iran as well as the historical behavior of OPEC based on its member countries interests has been analyzed. Considering the estimated Iran oil supply curve and estimation of real value of oil, the paper concludes that public ownership of oil resources together with state rather than private sector membership of OPEC have resulted in over-utilization of this exhaustive resources in Iran as well as in the export of crude oil with prices far below its real value.