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Repeated Auctions of Franchises for Nonrenewable Resources

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  • Osmundsen, Petter

Abstract

In maximizing the net total government take from exploitation of nonrenewable natural resource endowments, the government faces the problem that extraction companies possess private information about extraction capacities (adverse selection). In a repeated auctions model, I show that it is optimal to deviate from bidding parity, even in the absence of moral hazard. The second period auction is biased to mitigate the externality problem that stems from intertemporal dynamics in extraction costs. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • Osmundsen, Petter, 1996. "Repeated Auctions of Franchises for Nonrenewable Resources," Journal of Regulatory Economics, Springer, vol. 10(2), pages 183-189, September.
    • Handle: RePEc:kap:regeco:v:10:y:1996:i:2:p:183-89
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    Cited by:

    1. Chouinard Hayley H & Yoder Jonathan K, 2007. "Repeated Auctions with the Right of First Refusal," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-15, June.
    2. Osmundsen, Petter, 2002. "Regulation of common property resources under private information about resource externalities," Resource and Energy Economics, Elsevier, vol. 24(4), pages 349-366, November.
    3. Martin F. Quaas & Ralph Winkler, 2017. "A Market Mechanism for Sustainable and Efficient Resource Use under Uncertainty," CESifo Working Paper Series 6524, CESifo.
    4. Osmundsen, Petter, 1999. "Risk sharing and incentives in norwegian petroleum extraction," Energy Policy, Elsevier, vol. 27(9), pages 549-555, September.
    5. Hayley Chouinard, 2006. "Repeated Auctions with the Right of First Refusal and Asymmetric Information," Working Papers 2006-6, School of Economic Sciences, Washington State University.

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