Article Abstract:
Oil prices and pricing announcements made by the Organization of Petroleum Exporting Countries (OPEC) for the period from 1974 top 1983 are analyzed to determine the amount of influence OPEC policies had on rising and falling oil prices experienced internationally during these years. It is shown that rising oil prices during the period from 1974 to 1980 were not a product of OPEC announcements, but that the period of falling oil prices (1981 to 1983) was strongly influenced by the OPEC policies. OPEC pricing policies are announced twice each year, in addition to special announcements, on occasion. In the discussion of the research following its presentation, it is pointed out that the conclusions of the research are opposed to conventional wisdom regarding the cartel, and that this raises questions as to the accuracy of the research and the econometrics of the research methodology.
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Article Abstract:
When natural resources are valued based upon current prices net of extraction costs, the Hotelling Valuation Principle (HVP) has been used. Although oil and gas prices for the period from 1979 to 1981 support HVP as a pricing mechanism, an analysis of oil and gas prices for the period following August 1981 through December 1983 shows an uninformative result. However, when oil and gas royalty trust valuations were tested for these same periods, the HVP mechanism was supported. The limited sample sizes employed by the research in all cases may affect the validity of the HVP tests. The discussion following the research paper's presentation attempts to explain why a model supported in one period would not support pricing of the same commodity in another period.
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Article Abstract:
We study the price elasticity of demand for the common stock of an individual corporation. Despite the prevalence of assumptions that demand is perfectly elastic, there is little if any direct evidence in the literature to either support or reject that contention. Consistent with the notion of finite price elasticities, we find that the announcement of primary stock offerings by regulated firms depresses their stock prices and little if any evidence that this decline is the result of adverse information about future cash flows. Attempts to relate offer announcement effects directly to possible determinants of price elasticities, however, are inconclusive. (Reprinted by permission of the publisher.)
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