Question

Perhaps the most famous example of oligopolistic collusion is the Organization of Petroleum Exporting Countries (OPEC). During the 1970s, this cartel, which controlled much of the world supply of oil at the time, was able to control output and significantly raise world oil prices. However, since that time, OPEC has been largely unsuccessful in controlling the supply of oil.

Would it be possible for United States oil companies to form a cartel to attempt to raise United States oil revenues? Explain.

Answer 1

In th early 1970s the oil companies were on a high node and the prices rose a lot where the co-operation between the cartel countries slowly ceased which led to the failure in controlling the supply of oil where same is the case with the United States where there would be a loss in the co operation among the states though there had been a signed agreement regarding the cartel of controlling the oil revenue, Initially there can be a rise in the prices of oil but due to the inability of cooperation, the states tend to make most out of it which results in the overall failure of the economy. Therefore it would not be possible for United States oil companies to form a cartel to attempt to raise United States oil revenues