Soltanali Shahriari, Tohid Firoozan Sarnaghi, Nima Farazmand,
Volume 9, Issue 1 (4-2019)
Abstract
In the current political-economic conditions and the numerous violations by OPEC members of the group’s resolutions due to political and economic rivalries, especially the situation in the Middle East, the increase in political tensions between Iran and Saudi Arabia, along with the demand for OPEC oil and the position of OPEC in the global market Oil, internal competition among OPEC members has increased dramatically, and OPEC members’ oil policy has been more focused on internal competition. In such a situation, the competition between Iran and Saudi Arabia has become two-fold in the context of the political-economic conflict. In order to investigate the exact and scientific issues of the economic and political conflicts among OPEC members, OPEC’s internal competition has been considered within the framework of game theory. In this regard, the internal competition of OPEC members has been modelled as a leader-follower game, and by specifying the OPEC member’s profits function, the game’s Nash equilibrium point is calculated. Finally, based on the calculated balance point, optimum production and “follower behaviour” strategy are determined as the optimal strategy of Iran. Also, for the next period, the optimal production quantities are determined with the assumption of stable conditions. In this research, Iran’s short-term optimal policies in OPEC have been modelled based on the Leader-follower model. Perhaps, by introducing political indicators into the future profit equation, and more accurately, the response function of countries with respect to short-term economic and political conditions, each country will have more precise results to examine each member’s long-term optimal policy in OPEC
