Cornell University

Joint Industrial Organization & Sustainable Environment Energy and Resource Economics (SEERE) Workshop: Thomas Covert

Wednesday, February 26, 2020 at 11:40am to 1:10pm

Uris Hall, 498
Central Campus

Thomas Covert - University of Chicago

Relinquishing Riches: Auctions vs Informal Negotiations in Texas Oil and Gas Leasing

Abstract: This paper compares outcomes from informally negotiated oil and gas leases to those awarded via centralized auction. We focus on Texas, where legislative decisions in the early twentieth century assigned thousands of proximate parcels to different mineral allocation mechanisms. We show that during the fracking boom, which began unexpectedly decades later, auctioned leases generated at least 40 percent larger up-front payments and 60 percent more output than negotiated leases did. These results suggest large potential gains from employing centralized, formal mechanisms in markets that traditionally allocate in an unstructured fashion, including the broader $3 trillion market for privately owned minerals.

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Event Type

Class/ Workshop




EconSeminar, economics, EconIO



Contact E-Mail

Contact Name

Amy Moesch

Contact Phone



Thomas Covert

Speaker Affiliation

University of Chicago Booth School of Business

Open To

Cornell Economics Community (List Serve Members)