Autori
Libecap, Gary D.
Smith, James L.

Titolo
Regulatory remedies to the common pool : the limits to oil field unitization
Periodico
International Center for Economics Research, Torino. ICER - Working papers series
Anno: 1999 - Fascicolo: 10 - Pagina iniziale: 1 - Pagina finale: 30

This paper presents a theoretical framework for why unitization agreements may not be pareto improving and hence, why parties might then write incomplete agreements or continue to engage in competitive extraction, despite its costs. The analysis also explains why coercive unitization as a policy measure has been so strongly resisted politically. The analysis does not rely on high transactions costs or information asymmetries to explain its results. Rather it relies on the presence of both oil and gas in the reservoir with the parties holding amounts of each. Under reasonable conditions the parties may not be able to complete the trades of one substance for another which is necessary for unitization to occur. The paper adds to the energy and regulation literatures.



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