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Why did OPEC lose its price setting power during the 1980s?
Since the surge in oil prices during the 1970s there was an increased academic interest in explaining the formation of oil prices and the critical role played by OPEC in this process. A variety of economic models were established to explain the rise of price setting power by OPEC reflected in the massive price increases. During the 1980s, however, against many projections, the surge in oil prices came to a hold and from the 1980s on started to decrease, finally collapsing in 1986 to an unprecedented low. These ...