Joint bidding, information pooling, and the performance of petroleum lease auctions

Journal Article · Sat Jan 01 04:00:00 EST 1983 · Bell J. Econ.; (United States)

DOI:https://doi.org/10.2307/3003641· OSTI ID:5152913

DeBrock, L M ^[1]; Smith, J L

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1. Univ. of Illinois, Urbana-Champaign

This article uses a game-theoretic bidding model to examine the effect of joint bidding in offshore petroleum lease auctions. It shows that joint bidding increases the total social value of the lease offering and, in most cases, does not significantly decrease the percentage of social value captured by the government. These results follow from the fact that pooling of information concerning a prior unknown tract values allows for more accurate estimates. The anticompetitive effect of a reduced number of bidders tends to be offset by the well-known fact that better informed participants bid more aggressively. The findings are striking in that the model abstracts entirely from the effects of increased entry and greater risk diversification, the two common arguments in support of joint bidding. 12 references, 13 footnotes, 3 figures, 2 tables.

• OSTI ID: 5152913
• Journal Information: Bell J. Econ.; (United States), Journal Name: Bell J. Econ.; (United States) Vol. 14:2; ISSN BJECD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290100 -- Energy Planning & Policy-- Energy Analysis & Modeling
294002 -- Energy Planning & Policy-- Petroleum
BIDS
ECONOMIC ANALYSIS
ECONOMICS
GAME THEORY
INFORMATION THEORY
LEASING
MATHEMATICS
OFFSHORE SITES
STATISTICS