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The Visible Hand: National Oil Companies, Oil Supply and the Ermergence of the Hotelling Rent

Ludwig, Markus. (2012) The Visible Hand: National Oil Companies, Oil Supply and the Ermergence of the Hotelling Rent. WWZ Discussion Papers, 2012 (11).

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Abstract

Using firm-level panel data, this paper exposes differences in the dynamic oil produc- tion regime between private and state-owned firms. I find that state-owned firms reduce the oil supply, ceteris paribus, by 3.5 percent each year, but private firms hold output constant. Furthermore, state-owned NEWLINE firms have not followed such stringent policy before 1997. My ex- tension of the Hotelling-model attributes the behavior of state-owned firms to a scarcity rent, whereas private firms produce at their constant capacity limit, owing to possible expropriation. The theory also indicates that state-owned firms will only switch to a Hotelling-regime after a certain lag time, attributable to NEWLINE limited capacity. The data further reveals that contractions in the supply of state-owned oil lead to oil price increases, indicating that state-owned firms do, in fact, generate a scarcity rent. My results therefore suggest that the shift from private towards state-owned oil dominance in the 1970s gave rise to a delayed increasing oil price path.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Ludwig, Markus
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:41
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2012/11
Last Modified:09 Mar 2018 10:53
Deposited On:07 Mar 2018 10:40

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