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Rewarding Impatience: A Bargaining and Enforcement Model of OPEC

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  • Blaydes, Lisa
Abstract
In this article, I make two primary contributions to the literature on international cooperation. First, I present a simple version of Fearon's bargaining and enforcement model and show that impatience (as captured in the discount factor) can be a source of bargaining strength when the outcome of the bargaining phase is followed by an enforcement phase that resembles a prisoners' dilemma. Second, I illustrate how to apply this model to the question of the division of cartel profits within the Organization of Petroleum Exporting Countries (OPEC), particularly with regard to the relationship between bargaining strength and disparate time horizons. I find that for some critical threshold level, states that discount the future more heavily tend to receive better oil production offers than those that do not. I examine empirical evidence that suggests that countries in OPEC fall into the range where this proposition holds; in other words, relatively poor, populous countries and relatively unstable ones are allowed by OPEC to overproduce.I am grateful to Christino Arroyo, Jim DeNardo, Joe Gochal, James Honaker, Shuhei Kurizaki, Drew Linzer, Barry O'Neill, Art Stein, Hiroki Takeuchi, George Tsebelis, Jana von Stein, and two anonymous referees for helpful comments. I am especially indebted to Ken Schultz for his advice and to Randy Calvert for a helpful discussion during the 2003 EITM Summer Institute at Washington University in St. Louis.

Suggested Citation

  • Blaydes, Lisa, 2004. "Rewarding Impatience: A Bargaining and Enforcement Model of OPEC," International Organization, Cambridge University Press, vol. 58(2), pages 213-237, April.
    • Handle: RePEc:cup:intorg:v:58:y:2004:i:02:p:213-237_58
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    Cited by:

    1. James D. Morrow & Kevin L. Cope, 2021. "The limits of information revelation in multilateral negotiations: A theory of treatymaking," Journal of Theoretical Politics, , vol. 33(4), pages 399-429, October.
    2. Baccini, Leonardo & Lenzi, Veronica & Thurner, Paul W., 2013. "Global energy governance: trade, infrastructure, and the diffusion of international organizations," LSE Research Online Documents on Economics 62309, London School of Economics and Political Science, LSE Library.
    3. Federico Weinschelbaum & David K. Levine & Salvatore Modica & Felipe Zurita, 2010. "Evolving to the Impatience Trap: The Example of the Farmer-Sheriff Game," Working Papers 109, Universidad de San Andres, Departamento de Economia, revised Aug 2011.
    4. Philip Streich & Jack S. Levy, 2007. "Time Horizons, Discounting, and Intertemporal Choice," Journal of Conflict Resolution, Peace Science Society (International), vol. 51(2), pages 199-226, April.
    5. Gawdat Bahgat, 2013. "Oil producers’ perspectives on energy security," Chapters, in: Hugh Dyer & Maria Julia Trombetta (ed.), International Handbook of Energy Security, chapter 12, pages 258-272, Edward Elgar Publishing.
    6. Colgan, Jeff D., 2014. "The Emperor Has No Clothes: The Limits of OPEC in the Global Oil Market," International Organization, Cambridge University Press, vol. 68(3), pages 599-632, July.
    7. Johannes Urpelainen, 2011. "Domestic reform as a rationale for gradualism in international cooperation," Journal of Theoretical Politics, , vol. 23(3), pages 400-427, July.

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