Competitive bidding under asymmetrical information: behavior and performance in Gulf of Mexico drainage lease sales, 1959-1969

Journal Article · Wed Aug 01 04:00:00 EDT 1984 · Rev. Econ. Stat.; (United States)

DOI:https://doi.org/10.2307/1925011· OSTI ID:6513971

Mead, W J; Moseidjord, A; Sorensen, P E

In past Outer Continental Shelf oil and gas lease sales, winners of drainage tracts have tended to realize a higher economic return than winners of wildcat tracts. This paper finds empirical support for the hypothesis that adjacent lessees have an information advantage when bidding for drainage tracts under the cash bonus bidding system. This leads to superior economic returns, and thus explains the difference in returns between wildcat and drainage leases. The paper concludes that this difference and its cause do not pose a policy problem given empirical evidence that the government receives fair market value for the two lease categories combined.

• Research Organization: Univ. of California, Santa Barbara
• OSTI ID: 6513971
• Journal Information: Rev. Econ. Stat.; (United States), Journal Name: Rev. Econ. Stat.; (United States) Vol. 66:3; ISSN RECSA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000* -- Petroleum-- Legislation & Regulations
03 NATURAL GAS
031000 -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
294002 -- Energy Planning & Policy-- Petroleum
294003 -- Energy Planning & Policy-- Natural Gas
ATLANTIC OCEAN
BIDS
CARIBBEAN SEA
COMPARATIVE EVALUATIONS
COMPETITION
CONTINENTAL MARGIN
CONTINENTAL SHELF
ECONOMIC IMPACT
GEOLOGIC DEPOSITS
GULF OF MEXICO
INFORMATION
LAND LEASING
LAWS
LEASES
LEASING
MINERAL RESOURCES
NATURAL GAS DEPOSITS
PERFORMANCE
PETROLEUM DEPOSITS
PROFITS
RESOURCES
SEAS
SURFACE WATERS