Download This PaperOil Market Structure, Network Effects and the Choice of Currency for Oil Invoicing
33 Pages Posted: 19 Dec 2007
Date Written: December 2007
Abstract
A recurring theme in recent years in the debate on the international role of currencies has been the possibility of pricing oil in euro. This paper contributes to these debates by providing a detailed review of the empirical evidence regarding the market for crude oil and current oil invoicing practices. It introduces a network effect model to identify the conditions under which a parallel invoicing in different currencies would be possible. The paper also includes a simulation designed to illustrate the dynamics of the currency choice of oil invoicing.
Keywords: Trade invoicing, currency substitution, network effects, oil trade
JEL Classification: G14, O13, Q41
Suggested Citation: Suggested Citation
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