The Dynamics of the Revenue Maximization – Market Share Trade-off: Saudi Arabia’s Oil Policy in the 2014-2015 Price Fall

This paper follows on from ‘Saudi Arabia’s Oil Policy: More than Meets the Eye?’ published in June 2015, which raised a set of fundamental questions in relation to the sharp drop in the oil price between June 2014 and January 2015, and OPEC’s decision, spearheaded by Saudi Arabia, not to cut output in response.
We develop a simple analytical framework, which formalizes Saudi Arabia’s decision-making process relative to the fundamental revenue maximization-market share trade-off in the 2014-15 oil price fall. ….