Overview

Given the strategic importance of oil as a primary energy source and the complex dynamics of the world oil market, it is important to analyze the behavior of oil producing countries especially Organization of the Petroleum Exporting Countries. Since the 1973 oil shock, OPEC has been at the center of attention and considered as the main responsible for the following excessive increases in oil prices. There has been a long debate within the economic literature about the nature of OPEC and its power to influence the oil markets, whether it acts as a cartel or as a trade organization of competing producers. Although many empirical studies have been conducted, there is no conclusive and clear evidence on the behavior of OPEC and its members. This literature is characterized by a variety of approaches and conflicting interpretations. However, most studies have focused on time-series approaches using high-frequency observations with separate analyses for individual countries. The panel aspects of the data and their use in accounting for unobserved differences among countries have been hardly investigated. The main goal of this study is to make a contribution in the econometric models used to analyze the OPEC’s behavior. The adopted models are based on a modified version of Griffin’s (1985) approach, mainly focusing on the Collusive and Competitive behavior among OPEC countries. Th