The question is examined whether OPEC is in a position to collect a risk premium to effectively insure others against a …. Parties whose consumption is inelastic or negatively related to aggregate consumption collect risk premia. OPEC's revenues are … estimated, insofar as they are explained by OPEC's cartel pricing, to be strongly negatively related to aggregate consumption …

We show that statistical tests of OPEC behavior have very low power across a wide range of alternative hypotheses … account for the largely inconclusive nature of findings so far reported in the empirical literature on OPEC. We develop a new … approach for examining alternative hypotheses and find strong evidence of cooperative behavior among OPEC members. Our results …