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

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  • Paul A. Brehm
  • Eric Lewis

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.

Suggested Citation

  • Paul A. Brehm & Eric Lewis, 2021. "Information asymmetry, trade, and drilling: evidence from an oil lease lottery," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 496-514, September.
    • Handle: RePEc:bla:randje:v:52:y:2021:i:3:p:496-514
    DOI: 10.1111/1756-2171.12381
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    References listed on IDEAS

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