An Update on OPEC Behavior: Cartel Stability Under Falling Prices

Griffin\u27s widely cited study of OPEC behavior first tested the empirical validity of several alternative hypotheses that have been put forth to explain the motivations and market power of the OPEC member nations. Although the sample period considered by Griffin contains both upward and downward price fluctuations, the overall trend and dominant expectation among oil producers and consumers over that period was one of the steadily rising real oil prices both in the near and far term. Thus, the observed production behavior by both OPEC and non-OPEC producers over this period should have reflected this relatively optimistic (from the producers\u27 point of view) scenario of ever higher real oil prices