Research areas: Industrial Organization
Working Papers:
The Effect of Production Information on the Choices of Lease Locations: a Study of the Marcellus Shale
In November 2010, the Pennsylvania government began posting well-specific production data of the Marcellus Shale. The information reveals the shale gas reserve distribution. This paper studies the effect of the production information disclosure on the shale gas operators’ choices of lease locations. A theoretical model is proposed, in which firms sequentially choose the location with the highest expected return by conducting Bayesian updating about the locations’ output potentials, with their prior beliefs adjusted by the production data. The model is empirically examined using a novel dataset. Outcomes show that the production information shifts firms’ target leases towards more productive regions, leading to higher efficiency of the shale gas firms’ resource allocation.
Two Empirical Models of Matching Games
This paper proposes two empirical models of one-to-one matching games. The first models concerns static one-to-one transferable utility matching games with search frictions. Nonparametric identification is examined and illustrated using a simple example. The second model studies static one-to-one non- transferable utility matching games. It uses a parametric framework and allows heterogeneity by imposing random effects and random coefficients. In particular, a finite mixture model is considered. The paper then conducts a Monte Carlo exercise and uses the EM algorithm to estimate the model.
