You have been contracted by an economic consulting firm to determine the economic structure and possible future actions of OPEC, the Organization of Petroleum Exporting Countries.

It is because of large scale competition . On small scale individual firms cannot produce products . Further there is an incentive to engage in research and development . They have the ability to earn norm profits and have more market share . Also firms can have lower costs if technology improves

In game theory , how people respond in some strategic situations is studied . In an oligopoly , each company knows that its profits depend on response and activities of other firms in the market . This can be referred to as the "prisoners ' dilemma

The Organization

of the Petroleum Exporting Countries (OPEC ) is a large group of countries made up of Algeria , Angola , Indonesia , Iran , Iraq Kuwait , Libya , Nigeria , Qatar , Saudi Arabia , the United Arab Emirates Venezuela , and Ecuador (which rejoined OPEC in November 2007 . The main aim of OPEC is conclude the best tool to safeguard their interests , on an individual level and collective level as well . It also aims to stabilize the prices in international oil markets . It focuses on the economic and regular supply of petroleum to consuming nations

OPEC has not been so influential on the economy market . Concluding the First OPEC Summit in Algiers they forwarded a proposal for stable and just commodity prices , an international food and agriculture program technology transfer from North to South , and the democratization of the economic system

Overall , this suggests that OPEC did act as a cartel , when it adopted output rationing in to maintain price . It is well known that current sales of oil is largely dominated in US dollars , so if a change occurs in the dollar value with respect to other currencies , it will affect OPEC 's decision on how much oil to produce . When dollar value decreases relative to other currencies , the OPEC 's members will receive smaller revenues from...