Arbeitspapier
OPEC, Unconventional Oil and Climate Change - On the importance of the order of extraction
We show that OPEC's market power contributes to climate change by enabling producers of relatively expensive and dirty oil to start producing before OPEC reserves are depleted. We examine the importance of this extraction sequence effect by calibrating and simulating a cartel-fringe model of the global oil market. While welfare net of climate damage under the cartel-fringe equilibrium can be significantly lower than under a first-best outcome, almost the entire welfare loss is due to the sequence effect of OPEC's market power. In our benchmark calibration, the cost of the sequence effect amounts to 15 trillion US$, which corresponds to 97 percent of the welfare loss. Moreover, we find that an increase in non-OPEC oil reserves decreases global welfare. In a counterfactual world without non-OPEC oil, global welfare would be 13 trillion US$ higher, 10 trillion US$ of which is due to lower climate damages.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. TI 2020-001/VIII
- Klassifikation
-
Wirtschaft
Nonrenewable Resources and Conservation: Demand and Supply; Prices
Alternative Energy Sources
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy
- Thema
-
cartel-fringe
climate policy
non-renewable resource
Her?ndahl rule
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Benchekroun, Hassan
van der Meijden, Gerard
Withagen, Cees
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Benchekroun, Hassan
- van der Meijden, Gerard
- Withagen, Cees
- Tinbergen Institute
Entstanden
- 2020
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