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Photo by Campaign Creators on Unsplash The Differentiated Bertrand Model is a theoretical model used in economics that explores competition and pricing behavior among firms producing, as inferred, differentiated products. The Bertrand model alone, on the other hand, focuses on homogeneous products. In the differentiated Bertrand model, firms compete for imperfect substitutes. So, consumers have preferences […]

Photo by David Vives on Unsplash UPP, which stands for Upward Pricing Pressure, is a measure used in merger analysis to determine whether a given merger will result in higher prices for consumers. It was introduced in 2010 by economists Joseph Farrell and Carl Shapiro and bases itself on the idea that two merged firms may

Photo by Kaleidico on Unsplash The Herfindahl index, known as the Herfindahl–Hirschman Index or HHI, measures the size of firms in relation to the industry they operate in. Thus, it provides insight into how concentrated a market is, and is used in antitrust lawsuits to determine how much market power a given firm has. This is the

Photo by Paul Fiedler on Unsplash Horizontal restraints are contractual agreements between competing firms that restrain trade, such as by fixing prices, limiting production, rigging bids or auctions, or artifically allocating markets or customers. While horizontal restraints aren’t necessarily only anti-competitive—with some having pro-competitive effects as well—many cases of horizontal restraint, like price fixing, are purely

Photo by m. on Unsplash Similarly to horizontal restraints, horizontal mergers are mergers between firms that directly compete — take the Discovery and Capital One merger from just a few days ago. Firms compete, in turn, if customer view the firms’ products as substitutes (diversion being the principal metric there). Firms may horizontally merge to increase or protect their

Itis the job of prior generations to imbue wisdom to new ones; this is the way of the world and most certainly our species. As a mark of our species above others, we have trended toward the pursuit of self-actualization above other needs. In essence, we have climbed Maslow’s hierarchy so that the majority of

U.S. Industrial Production (FRED). Economic rent is excess income earned from a resource over the amount that is required to maintain the production and use of the resource. Economic rent is thus very relevant in oil markets and specifically details the extra income—positive spread—earned from oil extraction and sales over operational costs and investments. Private

Photo by Ben Wicks on Unsplash Much of OPEC behavior is fundamentally driven by the strategies price targeting and market sharing or any mix thereof. OPEC’s capacity utilization critically affects its ability to take new supply online or offline, and thus their ability to respond to changing market dynamics like new players entering the market or a

WTI prices over time (FRED). Speculative bubbles are common to any number of asset classes. The oil market is no exception, with numerous boom-and-bust cycles and periods of speculation dotting the past century. These bubbles significantly impact national and global economic performance and impact the lives of consumers given the integral role of oil as a

Photo by Chris LeBoutillier on Unsplash Unburnable carbon is to the notion that the volume of fossil fuels remaining in the ground, specifically that of crude, exceeds humanity’s “budget”, or the carbon emission cap we need to implement to limit temperature rise by 2°C. This forecast turns a significant (majority) portion of world oil reserves into stranded