IDEAS home Printed from https://ideas.repec.org/a/taf/uitjxx/v30y2016i5p387-414.html
   My bibliography  Save this article

Modeling the Expansion of Oil Production in South Texas and Mexico

Author

Listed:
  • David Hudgins
  • Jim Lee

Abstract

This study develops a dynamic output adjustment model that characterizes the expansion of U.S. oil production firms into Mexico. Using a Cobb-Douglas framework that differentiates U.S. and Mexican plants, we derive the comparative, static, risk-free, dual-country production levels for the multinational operations in each of the two countries when there are no capital constraints and perfect information. Given capital and labor constraints on Mexican production, the article uses an optimal control framework to derive the optimal production levels over time during a fixed adjustment period. This provides a pragmatic strategy for planning a growth path for investment in foreign operations.

Suggested Citation

  • David Hudgins & Jim Lee, 2016. "Modeling the Expansion of Oil Production in South Texas and Mexico," The International Trade Journal, Taylor & Francis Journals, vol. 30(5), pages 387-414, October.
    • Handle: RePEc:taf:uitjxx:v:30:y:2016:i:5:p:387-414
    DOI: 10.1080/08853908.2016.1204965
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/08853908.2016.1204965
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/08853908.2016.1204965?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ryan Kellogg, 2014. "The Effect of Uncertainty on Investment: Evidence from Texas Oil Drilling," American Economic Review, American Economic Association, vol. 104(6), pages 1698-1734, June.
    2. Hartley, Peter & Medlock III, Kenneth B., 2008. "A model of the operation and development of a National Oil Company," Energy Economics, Elsevier, vol. 30(5), pages 2459-2485, September.
    3. Lee, Jim, 2015. "The regional economic impact of oil and gas extraction in Texas," Energy Policy, Elsevier, vol. 87(C), pages 60-71.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alessandro Paolo Rigamonti & Giulio Greco & Mariarita Pierotti & Alessandro Capocchi, 2024. "Macroeconomic uncertainty and earnings management: evidence from commodity firms," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1615-1649, May.
    2. Lips, Johannes, 2018. "Debt and the Oil Industry - Analysis on the Firm and Production Level," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181504, Verein für Socialpolitik / German Economic Association.
    3. Karl Pinno & Apostolos Serletis, 2013. "Oil Price Uncertainty and Industrial Production," The Energy Journal, , vol. 34(3), pages 191-216, July.
    4. Bartram, Sohnke M. & Brown, Gregory W. & Stulz, Rene M., 2016. "Why Does Idiosyncratic Risk Increase with Market Risk?," Working Paper Series 2016-13, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    5. Alessandria,George & Khan,Shafaat Yar & Khederlarian,Armen, 2021. "Taking Stock of Trade Policy Uncertainty : Evidence from China’s Pre-WTO Accession," Policy Research Working Paper Series 9551, The World Bank.
    6. Andrew Balthrop, 2016. "Power laws in oil and natural gas production," Empirical Economics, Springer, vol. 51(4), pages 1521-1539, December.
    7. Mahdavi, Paasha, 2014. "Why do leaders nationalize the oil industry? The politics of resource expropriation," Energy Policy, Elsevier, vol. 75(C), pages 228-243.
    8. Zhang, Qizheng & Qian, Zesen & Wang, Shuo & Yuan, Lingran & Gong, Binlei, 2022. "Productivity drain or productivity gain? The effect of new technology adoption in the oilfield market," Energy Economics, Elsevier, vol. 108(C).
    9. Hitesh Doshi & Praveen Kumar & Vijay Yerramilli, 2018. "Uncertainty, Capital Investment, and Risk Management," Management Science, INFORMS, vol. 64(12), pages 5769-5786, December.
    10. Gabriel P. Mathy, 2020. "How much did uncertainty shocks matter in the Great Depression?," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(2), pages 283-323, May.
    11. Mayer, Adam, 2018. "The Fiscal Impacts of Energy: Perspectives from local governments in the Mountain West, USA," Energy Policy, Elsevier, vol. 122(C), pages 186-193.
    12. Hsu, Kuang-Chung & Wright, Michael & Zhu, Zhen, 2017. "What motivates merger and acquisition activities in the upstream oil & gas sectors in the U.S.?," Energy Economics, Elsevier, vol. 65(C), pages 240-250.
    13. Yin, Libo & Yang, Sen, 2023. "Oil price returns and firm's fixed investment: A production pattern," Energy Economics, Elsevier, vol. 125(C).
    14. Auping, Willem L. & Pruyt, Erik & de Jong, Sijbren & Kwakkel, Jan H., 2016. "The geopolitical impact of the shale revolution: Exploring consequences on energy prices and rentier states," Energy Policy, Elsevier, vol. 98(C), pages 390-399.
    15. van den Bremer, Ton & van der Ploeg, Frederick & Wills, Samuel, 2016. "The Elephant In The Ground: Managing Oil And Sovereign Wealth," European Economic Review, Elsevier, vol. 82(C), pages 113-131.
    16. Guettabi, Mouhcine & James, Alexander, 2020. "Who benefits from an oil boom? Evidence from a unique Alaskan data set," Resource and Energy Economics, Elsevier, vol. 62(C).
    17. Victor Aguirregabiria & Allan Collard-Wexler & Stephen P. Ryan, 2021. "Dynamic Games in Empirical Industrial Organization," NBER Working Papers 29291, National Bureau of Economic Research, Inc.
    18. Bell, Kendon & Zilberman, David, 2016. "The potential for renewable fuels under greenhouse gas pricing: The case of sugarcane in Brazil," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt03h2850w, Department of Agricultural & Resource Economics, UC Berkeley.
    19. Soojin Jo, 2012. "The Effects of Oil Price Uncertainty on the Macroeconomy," Staff Working Papers 12-40, Bank of Canada.
    20. Yin, Libo & Nie, Jing & Han, Liyan, 2021. "Understanding cryptocurrency volatility: The role of oil market shocks," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 233-253.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:uitjxx:v:30:y:2016:i:5:p:387-414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/uitj20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.