Index
Introduction - 1
Defining A Market - 2
The Importance Of Competition - 3
The Result Of Competition - 4
Intervening In Markets - 5
The Allocative Role - 6
The Distributive Role - 7
The Regulative Role - 8
The Regulative Role (continued) - 9
The Role Of Government - 10
The Role of Government (continued) - 11
The Stabilizing Role - 12
Vertical and Horizontal Integration Defined - 13
Defining Market Structure - 14
How A Firm Can Grow - 15
Mergers and Takeovers - 16
Vertical And Horizonal Integration (Diagram) - 17
Why markets Vary in Structure - 18
Product Differentiation - 19
Product Differentiation (continued) - 20
Free Range ''Googs''- 21
Product Differentiation (continued) - 22
Non Price Competition - 23
Non Price Competition (continued) - 24
Defining The Types Of Market Structures - 25
Perfect Competition - 26
Perfect Competition (continued) - 27
The Market For Oranges - 28
The Market For Oranges (continued) - 29
Bitter Oranges - 30
Summary: Perfect Competition - 31
Monopolistic Competition - 32
True Blue Oranges - 33
Monopolistic Competition (continued) - 34
Oligopoly - 35
Oligopoly (continued) - 36
Oligopoly (continued) - 37
Kinked Demand Curves - 38
OPEC - 39
OPEC (continued) - 40
Monopoly - 41
Microsoft - 42
Why Monopolies Are Inefficient - 43
Revision Questions On Market Forms - 44

OPEC - 39
The Organisation of Petroleum Exporting Countries or OPEC has tried in the past to influence the price of oil. OPEC is dominated by the Arab oil producers of the Persian Gulf, particularly Saudi Arabia. The world oil production market is an oligopoly. OPEC acts as a cartel - another name for an oligopoly of producers of a commodity.

Production is dominated by a relatively small number of nations (whose oil supplies are nationalised assets, and controlled by their governments.) If OPEC and other oil exporters did not compete, they could ensure much higher prices for prices for everyone.

Oil refining is also another oligopoly, dominated by the ''seven sisters''; multinational oil companies like BP, Shell, and Exxon.

In March 1986, the ''spot'' price for crude oil (in US$ per barrel) was US$26.10. By September 1986, the price fell to US$22 per barrel. In March, 1987, the price of crude oil slumped further, to US$18.00 per barrel. By December, 1987, the price hit a record low of US$16 per barrel. What was going on?

OPEC can only influence world oil prices if all its members agree to abide by production quotas that are set for each member nation. OPEC could become an effective cartel or uncompetitive market supplier, if all its members agreed to ''carve up'' the market, and restrict sales. However, the temptation to ''cheat'', and produce more than your quota proved impossible to resist for some nations, especially Iran and Iraq, which were involved in a bitter war throughout the 1980's. Both these nations needed oil revenues to pay for food and for military supplies.