Abstract

http://ssrn.com/abstract=1103019
 
 

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Determinants of Nationalization in the Oil Sector: A Theory and Evidence from Panel Data


Sergei M. Guriev


New Economic School (NES); Sciences Po; Centre for Economic Policy Research (CEPR)

Anton Kolotilin


University of New South Wales (UNSW)

Konstantin Sonin


Higher School of Economics; Centre for Economic Policy Research (CEPR)

February 1, 2008

Journal of Law, Economics, and Organization, 27 (2): 301-323, 2011.

Abstract:     
In this paper we study nationalizations in the oil industry around the world in 1960-2002. We show, both theoretically and empirically, that governments are more likely to nationalize when oil prices are high and when political institutions are weak. We consider a simple dynamic model of the interaction between a government and a foreign oil company. The government cannot commit to abstain from expropriation and the company cannot commit to pay high taxes. Even though nationalization is inefficient it does occur in equilibrium when oil prices are high. The model's predictions are consistent with the panel analysis of a comprehensive dataset on nationalizations in the oil industry since 1960. Nationalization is more likely to happen when oil prices are high and the quality of institutions is low even when controlling for country fixed effects.

Number of Pages in PDF File: 28

Keywords: oil, nationalization, property rights protection

JEL Classification: D23, L33, L71, P48

Accepted Paper Series


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Date posted: March 7, 2008 ; Last revised: October 22, 2012

Suggested Citation

Guriev, Sergei M. and Kolotilin, Anton and Sonin, Konstantin, Determinants of Nationalization in the Oil Sector: A Theory and Evidence from Panel Data (February 1, 2008). Journal of Law, Economics, and Organization, 27 (2): 301-323, 2011.. Available at SSRN: http://ssrn.com/abstract=1103019

Contact Information

Sergei M. Guriev
New Economic School (NES) ( email )
47 Nakhimovsky Prospekt
Moscow
Russia
+7 095 129 3844 (Phone)
+7 095 129 3722 (Fax)
HOME PAGE: http://www.nes.ru/~sguriev/
Sciences Po ( email )
27 rue Saint-Guillaume
Paris Cedex 07, 75337
France
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Anton Kolotilin
University of New South Wales (UNSW) ( email )
Sydney, NSW 2052
Australia
Konstantin Sonin (Contact Author)
Higher School of Economics ( email )
20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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