Abstract
This paper examines OPEC's long-lived mechanism which targets the oil price and adjusts the quality ceiling to meet the target. The stability of this controversial mechanism is compared to that of two alternatives: one requires quantity control without any price targeting and the other is a synthesis of quantity control and the OPEC mechanisms. All three mechanisms passed the stability test and the two alternatives give rise to some interesting policy implications. Practically considerations which involve the availability of specific information make OPEC's mechanism the most appropriate in terms of achieved targeted revenues. The paper also offers a convergence strategy that speeds up the achievement of targeted revenues under OPEC's current mechanism.
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