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Published October 24, 2017 | Submitted
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The Transition to Uncontrolled Crude Oil Prices

Abstract

The purpose of this paper is to outline some initial steps toward the construction of an adequate dynamic analysis of oil price controls. A precise description of the goals and structure of current price controls is provided. These controls are characterized in a dynamic model that generates estimates of efficiency losses and wealth transfers. A simple dynamic model of oil production is also developed. The dynamic model leads to 2 conclusions: (1) in the short-term, continued controls are likely to lead to larger rates of domestic crude oil production than would exist if controls were removed; and (2) a multi-part pricing system that is neutral in its effects on production decisions in a static context is not neutral in a dynamic model.

Additional Information

Prepared for the National Bureau of Economic Research Conference on Public Regulation, Washington D.C., December 15-17, 1977. Published as Montgomery, David. Transition to uncontrolled crude oil prices. Conference paper No. 69. No. CONF-771290-1. National Bureau of Economic Research, Inc., Cambridge, MA (USA), 1980.

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August 19, 2023
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