Discuss the economic incentive

Discuss the economic incentives for vertical integration (asopposed to spot
markets or contracts) in the petroleum industry as the globaloil market
increased in sophistication. Discuss the differences betweenexchanges and OTC or bilateral market


As we all know, the oil industry today is more sophisticatedthan ever, thanks to the sanctions and a complex governance,petrodollars and many more. To leverage on all aspects, includingeconomic incentives, vertical integration is preferred. In general,vertical integration is associated with gaining more market powerand oil industry is no exception to this: that is promotion ofimperfect competition in the market. Studies suggest that due tothis activity in oil industry, it is able to regulate theperformance efficiency of those small companies with excessiveprofits. Typical examples are that of the companies in thegulf.

Now let’s look at the differences between exchanges and OTC.

  • OTC means the Over The Counter, i.e. deals with shares,equities and derivatives. Whereas exchange market is a platformwhere the currencies are traded. Multiple currencies are tradedwith each other.
  • OTC is decentralized, meanig there are a lot of mediators inthe transaction, as against exchange market which is completelycentralized meaning transactions are carried out throughcentralized source.
  • OTC is standardized, that is there is a regulatory body whichoverlooks of the consumer rights. In exchange markets there is nospecific agreement for this purpose.
  • In OTC market, all the terms and conditions associated with atransaction involves only the parties involved unlike the exchangemarket, which is very transparent and the prices of currencies arehighly visible.

Hope this helps. Do hit the thumbs up. Cheers!

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.