Offshore Oil and Gas Lease Auctions

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This award is to continue research on the role of information in the auction of off-shore oil and gas leases. Under the previous award, the investigators have assembled a detailed data set of off-shore lease auctions from 1954 through 1969. A preliminary statistical analyses of these data has been conducted, and the authors have studied the existence and influence of asymmetric information in lease auctions on bidding behavior. This award will extend the data set of off-shore lease auctions through 1980. In addition, these data will be analyzed in several new contexts. A detailed, econometric study will be undertaken of the participation and bidding decisions by firms for wildcat tracts, the formation of bidding consortia among firms, and the influence of post-auction information on exploratory drilling decisions. Alternative auction procedures will also be investigated. This project is important because it will provide a better understanding of the role of information in off-shore oil and gas-lease auctions.