Cooperative Behavior in the Oil Market

Abstract As we know, within the oil market there are cases of cooperatives among manufacturers undertaken in order to develop common behavior strategies to control an oil output level and prices for profits maximization. Studies of this issue have a long history, but remain relevant today. Understanding the cooperation’s nature and its role in the global oil market is important for the correct market processes prediction and developing of effective strategies for market participants.Switching from a competitive to non-cooperative behavior, as a result of collusion, market participants artificially inflate a price which negatively affects the consumers’ welfare. But at the same time, cooperation between producers may have an implicit character. This type of relationship does not constitute a violation of antitrust policy, but at the same time helps market participants to reduce the competition level, mitigate market risks and reduce ambiguity.In this work attempts are made to use the mathematical modeling in order to determine the interaction nature and cooperation signs among players. As a result, the econometric analysis draws conclusions about the character of the oil market participant’s relationships during 2002-2013 time periods.In the study econometric regression analysis are used and conducted a series of tests to determine the market structure, also conducted tests on the interdependence among the strategies adopted by OPEC countries and other participants’ response in the oil market. In addition, this research studies the impact of cooperative behavior and collusion factors on the world oil market.The conclusions obtained extend logically the matter under consideration and pose new challenges for further research, such as definition of oil market factors affecting the formation of collusion among players.