Preemption, Contracting Frictions and Investment Efficiency in Shale Gas Extraction
This project aims to understand how the selling of exploitation rights for mineral reserves as well as the contractual terms between landowners and gas firms shape the speed at which the exploitation of resources is made. More specifically, should governments intervene in the way contracts between oil companies and landowners are written? Does the laissez-faire equilibrium lead to the optimal extraction rate of U.S. minerals or instead cause inefficiency? Is the inefficient outcome far from the social welfare maximizing equilibrium?