Economics

Theoretical employment of Taxes and Cartelsin the scram of OPEC (name (schoolTheoretical Application of Taxes and Cartels in the Experience of OPEC Page 1Competition screw make wonders in the economy . The lift out human activity like the outperform record in the 100-meter dash in the Olympics can be brought out in a spirit of challenger . The best shoes can be produced in the market if thither is fair competition among the shoe producers Fair competition can make wonders both(prenominal) in human activities and in the market system . thus far , it is also inte fill-ining to learn the characteristics of a market where there are only a few playersThe world has seen the best example of the oligopoly , and this will be discussed later in this . Because there are only a few players in an oligopoly , producers take to the woods to collude with each other rather than depend on their independent action . A bargain , or a formal organization of the producers within a given diligence , is an example of perfect collusion among bewrayers in an industry . A good example of this is the Organization of Petroleum Exporting Countries (OPEC . Its authorization can be gleaned from the fact that it was able to increase the worth of oil substantially , thus giving benefit to the OPECThis cartel hits the headlines in the late 1973 when its members precipitated a crisis in the United States and the rest of the world by announcing its cutback in oil exports . Then it attracted win attention by taking a series of actions resulting in every large increase in terms of gross oil . For example , the expenditure of Saudi-Arabian Arabian glaring oil jumped from about three US dollars in 1973 to oer ten US dollars in early 1974 to about 30 US dollars in 1983OPEC consists of twelve major oil producing countries , including Saudi Arabia , Iran , Venezuela , Libya and Algeria .

The OPEC countries impose and excise tax of so many cents per barrel . These taxes are well publicized and like any excise tax , they are treated as a price of production by any of the international oil companies . gum olibanum , by increasing these taxes , the OPEC countries can increase the price of glaring oil , since no company can afford to sell oil for less than its production costs plus the taxTheoretical Application of Taxes and Cartels in the Experience of OPEC Page 2How far are they seeming to increase the price ? According to a model , whiz would expect the OPEC cartel to push the crude oil price up toward the monopoly level , since this would increase the tax revenuesCartels , in to be successful and effective , must possess the following characteristics (Machlup , 1962 : 363-365All producers or sellers in the industry are included in the treatyThe agreement is definite and enforceable on all parties to itIt covers both the price to be charged and the quantity of output to be produced by each agreeing seller , the output allocation being calculated as to...If you want to get a full essay, lay it on our website: Ordercustompaper.com

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