How Best to Auction Natural Resources

Peter Cramton

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: I study the design of auctions of natural resources, such as oil or mineral rights. 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 simple value structures, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids likely is needed to promote efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take by reducing oil or mining company risk.

Keywords: Auctions; natural resource auctions; oil auctions (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2009, Revised 2009
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Citations: View citations in EconPapers (3)

Published in Philip Daniel, Brenton Goldsworthy, Michael Keen, and Charles McPherson (eds.), Handbook of Oil, Gas And Mineral Taxation, Chapter 10, forthcoming, Washington, DC: IMF

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