Template-type: ReDIF-Paper 1.0
Author-Name: Philip U. Sauré
Author-Name-First: Philip U.
Author-Name-Last: Sauré
Author-Person: psa635
Title: Overreporting Oil Reserves
Abstract: An increasing number of oil market experts argue that OPEC members substantially overstate their oil reserves. While the economic implications could be dire, the incentives for overreporting remain unclear. This paper analyzes these incentives, showing that oil exporters may overreport to raise expected future supply, thereby discouraging oil-substituting R&D and improving their own future market conditions. In general, however, overreporting is not costless: it must be backed by observable actions and therefore induces losses through supply distortions. Surprisingly, these distortions offset others that arise when suppliers internalize the buyers' motives for R&D. In this case, overreporting is rational, credible, and cheap.
Length: 45 pages
Creation-Date: 2010
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2010/working_paper_2010_07
File-Format: text/html
Number: 2010-07
Classification-JEL: F10, F16, D82
Keywords: Exhaustible Resource, Substitution Technology, Signaling
Handle: RePEc:snb:snbwpa:2010-07