Essays on Energy Economics

This dissertation explores the social causes and effects of natural resource exploitation. The empirical context is the early development of the shale revolution, which provides a rich context for study. It allows me to observe technology development from its inception to broad adoption at the level of the firm, and it also allows me to explore the effects of firm interactions with households. The first paper, Discrimination and Skill in Bargaining Outcomes: Evidence from Mineral Rights Leases, examines how the human capital and race of landowners influences their outcomes in negotiating mineral rights leases. Mineral rights leases are complex financial transactions which a household will probably undertake very few times, like taking out a mortgage for a house. In the limited literature on mortgages, educational attainment was a large predictor of getting favorable mortgage terms, but race was even more important. I find that in features of the lease which are more salient, the royalty rate, that education explains the disparities amoung ethnic groups. In a less salient feature, the lease length, education is not fully explanatory, which suggests discrimination based on race or ethnicity. In both cases, industry competition decreases disparities. The second paper, The Tragedy of the Anti-Commmons or Holdout? Evidence from Mineral Rights Leases, seeks to answer a question in the law and economics literature on the presence and nature of the tragedy of the anti-commons. In the theory of the anti-commons, first proposed by Michael Heller in the Harvard Law Review, inefficiencies occur when many parties have veto power over a project because of elevated transaction costs and the possibility of holdup. In this case, I look at the spatial version of the anti-commons, where a property is too small to useful until it is joined by other properties. By regulation in the state of Texas, firms must have twenty contiguous acres of mineral rights under lease in order to get a permit to drill in the Barnett Shale. When shale gas production spread from ranches on large parcels of land into more densely populated urban and suburban areas, firms needed to gather one hundred or more leases in order to comply with the regulation. This is, I believe, the first quantitative empirical paper to examine this topic, and contributes to a literature on one-to-many contracting, which has been little-studied. I find that there is some evidence for the tragedy of the anti-commons, but little evidence for holdout. The third paper explores the mechanisms of innovation and technology diffusion. I show that technology developed in one firm then spreads through spillovers to other firms in the industry. I find that these spillovers are strongly associated with the movement of labor among firms. There are two main policy implications of my findings. The first is that the private rents to innovation, in this case, were not fully captured by the innovative firm. While other literature has found spillovers of innovation to be on the order of twice as large as private rents, here they are much larger. This suggests that there is good reason to subsidize innovation. In addition, because the movement of labor is highly associated with better outcomes at the receiving firm, it is understandable why some technology-intensive industries make use of non-complete clauses in their employment contracts. The degree to which these are successfully enforced varies considerably across regions of the US