Class16 - Enforcement and International Institutions OPEC...

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Enforcement …and International Institutions OPEC and Oil Prices The Organization of Petroleum Exporting Countries (OPEC) strongly influences the price of oil by controlling production. Restricting production raises prices Incentives to produce more than quota Difficulties of determining who has cheated Why has OPEC been able to control oil prices? The Problem of Cooperation Often nations have issues where they share some common interests but also disagree about how exactly to pursue those interests. Trade: what barriers are acceptable? The Global Economy: who pays the price of adjustment? Environment: how much is enough and who pays for the clean up? In all these cases, all states would be better off if they could agree and implement a coordinated solution to the problem. Cooperation is not necessarily good. On issues in IPE, states cannot use force to produce the outcome they would like. Instead, effective solutions require the cooperation of many states. Enforcement and Coordination
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This note was uploaded on 09/27/2008 for the course POLISCI 160 taught by Professor Morrow during the Fall '08 term at University of Michigan.

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Class16 - Enforcement and International Institutions OPEC...

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