Economic Theory and Experimental Seminar - Rob Porter (Northwestern University)
Room 315, Level 3, FBE Building, 111 Barry Street, CarltonMap
Title: Testing Collusion in U.S. Offshore Oil and Gas Lease Bidding
Abstract: Since the 1980s, most of the oil and gas tracts auctioned by the federal government in the Gulf of Mexico are adjacent to tracts that are already under lease. Owners of neighboring leases enjoy incumbency advantages that act as a barrier to entry for other rms. We ask: can these owners take advantage of their situation and agree not to compete? To answer this question, we develop two tests of competitive bidding in common value, rst-price auctions where rejection suggests collusion. We implement these tests using data on bids and tract characteristics. The results have important implications for rent capture and auction design.