Game theory

 

 

 

 

 

In late April, oil prices dropped to a historic low: -$37 (negative $37!) per barrel, on the May futures contract.

The short video clip below talks about the supply and demand conditions that led to this unusual occurrence.

Required: The OPEC has long served as an example for a cartel in lessons (in economics) on Oligopoly. Apply your understanding of game theory to explain why OPEC finds it difficult to enforce production limits (quotas) on its member countries. One article is provided for your reference; you may want to read at least one more. Cite additional article(s) you read.

https://www.bloomberg.com/news/articles/2020-05-04/opec-middle-east-oil-flows-surged-in-april-as-saudis-opened-taps

 

 

This question has been answered.

Get Answer