Information asymmetry, trade, and drilling: evidence from an oil lease lottery

Abstract

We exploit a government oil lease lottery that randomly assigned leases to individuals and firms. We examine how initial misallocation affected trade, drilling, and production outcomes. When parcels are far from existing production, leases won by individuals have similar drilling and production outcomes as those won by firms. However, for parcels close to existing production, we find that leases are about 50% less likely to be drilled when they are won by firms. We find evidence that information asymmetries drive these results.

Publisher

Wiley

Publication Date

9-1-2021

Publication Title

Rand Journal of Economics

Department

Economics

Additional Department

Environmental Studies

Document Type

Article

DOI

https://dx.doi.org/10.1111/1756-2171.12381

Keywords

Common pool, Uncertainty, Market, Model

Language

English

Format

text

Link to Full Text

Share

COinS