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

In: The Rand journal of economics, Band 52, Heft 3, S. 496-514

Abstract

AbstractWe 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.