Abstract
This paper describes LTM, a long term model of oil markets, economic growth and balance of payments constraints. In this paper the model is used to investigate the role of the demand elasticity for oil in determining OPEC’s profit-maximizing production profile. Our experiments reveal that in a model with intertemporal substitution and endogenous capital formation, gross revenue curves are fairy flat. Hence their economic optimum is virtually indeterminate. This suggests considerable leeway in OPEC’s determination of pricing and production policies.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Armington P (1969) “A theory of demand for products distinguished by place of production,” and ‘The geographic pattern of trade and the effects of price changes,’ International Montctary Fund Staff Papers 16
Broadie M N “An introduction to the octahedral algorithm for the computation of economic equilibria”, in Mathematical Programming Study 23: 121–143, North-Holland
Goulder L, Summers L (1989) ‘Tax policy, asset prices and growth: a general equilibrium analysis’, Journal of Public Economics, 38: 26–296
Kehoe T J, Serra-Puche J (1983) “A computational general equilibrium model with endogenous unemployment: an analysis of the 1980 fiscal reform in Mexico”, Journal of Public Economics, 22: 1–26
Kim S (1981), “General equilibrium models: formulation and computation”, doctoral dissertation. Department of Operations Research, Stanford University, August.
Manne A S with the assistance of Kim S (1981) “Energy, international trade, and economic growth,” World Bank Staff Working Paper No. 474, August
Manne A S, Preckel P V (1984) “North-South trade, capital flows and economic growth: an almost neoclassical model,” in M Syrquin, L Taylor and L Westphal (eds) Economic Structure and Performance, Academic Press.
Manne A S, Preckel P V (1985) “A three-region intertemporal model of energy, international trade and capital flows”, in Mathematical Programming Study, 23: 56–74, North-Holland
Manne A S, Rutherford T F (1985) “LTM: a long-term model of Mexico’s growth and balance-of- payment constraints”. Department of Operations Research, Stanford University, October.
Manne A S, Schrattenhoker L (1988) “The International Energy Workshop: A Status Report”, OPEC Review
Mathiesen L “Computntion of economic equilibria by a sequence of linear compementarity problems”, in Mathematical Programming Study. 23: 144–162, North-Holland
Perroni C, Rutherford T F (1989) “Regularly flexible functional forms for applied general equilibrium analysis,” CSIER Working Pnper 8906C, Department of Economics, University or Western Ontario
Rutherford T F (1986) “Applied general equilibrium modeling”, doctoral dissertation, Department of Operations Research, Stanford University, November.
Shoven J B, Whalley J (1972) “A general equilibrium calculation of the effects of differential taxation of income from capital in the U.S.”, Journal of Public Economics, 1: 281–321
Svoronos A (1984) “Duality theory and finite horizon approximations for discrete time inifinite horizon convex programs”, doctoral dissertation, Department of Operations Research, Stanford University, April.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1991 Physica-Verlag Heidelberg
About this paper
Cite this paper
Manne, A.S., Rutherford, T.F. (1991). A Long Term Model of Oil Markets, Economic Growth and Balance of Payment Constraints. In: Piggott, J., Whalley, J. (eds) Applied General Equilibrium. Studies in Empirical Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-50167-8_4
Download citation
DOI: https://doi.org/10.1007/978-3-642-50167-8_4
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-642-50169-2
Online ISBN: 978-3-642-50167-8
eBook Packages: Springer Book Archive