Competition and Unitization in Oil Extraction: A Tale of Two Tragedies
This paper compares two organizational modes for extracting oil from a common pool: unitization and competitive extraction. The analysis suggests that the general presumption that unitization is surplus enhancing relative to competitive extraction may not always be valid due to contractual incompleteness associated with unitization contracts. While competitive extraction suffers from the tragedy of the commons, unitization can be subject to the dual tragedy of the anticommons. This provides an explanation for the puzzle confronting the oil industry that firms are often reluctant to voluntarily enter unitization agreements.
Volume (Year): 4 (2008)
Issue (Month): 1 (December)
|Contact details of provider:|| Web page: http://www.degruyter.com|
|Order Information:||Web: http://www.degruyter.com/view/j/rle|
When requesting a correction, please mention this item's handle: RePEc:bpj:rlecon:v:4:y:2008:i:1:n:24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)
If references are entirely missing, you can add them using this form.