Organization of Petroleum Exporting Countries (OPEC) has been called many names; monopoly, oligopoly, cartel, or all of the above. Reading further will give information on to why OPEC is an oligopoly. To give you a brief background on OPEC, explain to you how OPEC acts like a cartel and of why OPEC is a successful oligopoly and cartel. Is OPEC a successful oligopoly? Some people refer to OPEC as a cartel which is another name for oligopoly. Some people like to think OPEC is a monopoly but the press likes to exaggerate of what power it has. Monopoly is defined as when a person or enterprise is the only controller of a commodity. An oligopoly is a market form which a market or industry is dominated by small number of sellers.
The Organization of Petroleum Exporting Countries (OPEC), is best defined as an oil company which is located in Vienna, Australia. It was established in Baghdad in 1960 to coordinate the petroleum production and export policies of its members. Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela were the original members. Qatar joined in 1961 followed by Indonesia and Libya in 1962. Abu Dhabi in 1967 joined which later transferred to the United Arab Emirates in 1974. Algeria joined in 1967 as well as Nigeria inn 1971. Ecuador (1973) and Gabon (1975) are no longer OPEC members. The policy decisions are voted upon at its Vienna headquarters. In 1973 Arab-Israeli war, and OPEC member’s income has drastically increased as a result. Non OPEC countries are trying to combined together to limit the effect of the OPEC cartel. OPEC countries supplies are about two-fifths of the world’s oil consumption and possess about two-thirds of the world’s proven oil reserves. Oligopoly is defined as that of an industry’s that is controlled by a few major players. OPEC is a prime example of an oligopoly. OPEC meets to discuss the amount of oil they will allow into the worlds market. Thus controlling the price and...