Dynamic Bargaining and the Prospects for Learning in the Petroleum Industry: The Case of Kazakhstan

in Perspectives on Global Development and Technology
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Abstract

This article examines the bargaining interface between petroleum-rich developing countries and large multinational corporations, with an application to the case of Kazakhstan, formerly a Soviet Republic. In the analytic narrative tradition, this article combines a case study with an extensive form game, applying Theodore Moran's dynamic bargaining theory, which posits that, over time and through repeated interaction, developing countries do better for themselves, incrementally improving their outcomes through bargaining and strategic interaction, thereby advancing along a learning curve. The application of this theory is systematized through the utilization of game theory; an extensive game modeled on strategic, iterated bargaining behavior between the two actors is introduced. This dynamic game allows for the recalculation of strategies based on the players' revealed moves, allowing for the concept of learning while doing. The game is then applied to Kazakhstan's particular situation. The application of Moran's theory through the use of a generalizable game provides a method for resource-rich developing countries—particularly those in the nascent stages of developing these industries—to systematize the negotiation process and accelerate their ascent on a bargaining learning curve.

Dynamic Bargaining and the Prospects for Learning in the Petroleum Industry: The Case of Kazakhstan

in Perspectives on Global Development and Technology

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