How Best to Auction Oil Rights
I study the design of oil rights auctions. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and additive values, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids, such as the clock-proxy auction, likely is needed to promote the efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take by reducing oil company risk.
|Date of creation:||2005|
|Date of revision:||2005|
|Publication status:||Published in Macartan Humphreys, Jeffrey Sachs, Joseph Stiglitz, eds., Escaping the Resource Curse, forthcoming, 2006.|
|Contact details of provider:|| Postal: Economics Department, University of Maryland, College Park, MD 20742-7211|
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Cramton, 1997.
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97jemsfcc, University of Maryland, Department of Economics - Peter Cramton, revised 12 Jul 1998.
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784828000000000495, UCLA Department of Economics.
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- Peter Cramton & Jesse Schwartz, 2000.
"Collusive Bidding in the FCC Spectrum Auctions,"
Econometric Society World Congress 2000 Contributed Papers
1210, Econometric Society.
- Milgrom,Paul, 2004.
"Putting Auction Theory to Work,"
Cambridge University Press, number 9780521536721, June.
- Lawrence M. Ausubel & Peter Cramton, 2004.
"Auctioning Many Divisible Goods,"
Papers of Peter Cramton
04jeea, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
- Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
- R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
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