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Bargaining, Strategic Reserves, and International Trade in Exhaustible Resources
Author(s) -
Crawford Vincent P.,
Sobel Joel,
Takahashi Ichiro
Publication year - 1984
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1240926
Subject(s) - stylized fact , economics , context (archaeology) , microeconomics , resource (disambiguation) , oil reserves , natural resource economics , industrial organization , macroeconomics , petroleum , computer science , biology , paleontology , computer network
This paper proposes a framework for the analysis of optimal strategic reserve policy when ability to withstand embargoes influences terms of trade in an exhaustible resource like oil. The mode embodies two stylized facts: competitive forces are not always strong enough to eliminate other influences on the negotiated price of oil, and long‐term contracts for oil delivery cannot be enforced across national boundaries. Some modeling issues that arise in this context are discussed, and a model of optimal strategic reserve policies is proposed and solved in a leading special case.