Are joint bidding and competitive common value auction markets compatible?—some evidence from offshore oil auctions

Abstract

In this paper we consider whether joint bidding for oil leases in U.S. Department of the Interior Outer Continental Shelf (OCS) auctions has been compatible with the maintenance of competition in these auctions. In 1975 eight major oil companies were banned from being co-bidders on any joint bids, apparently due to concern that joint bidding was fostering collusion. Focusing on eight major companies, five of which were banned from joint bidding in 1975, we present evidence which strongly suggests that joint bidding was consistent with more competitive rather than less competitive behavior.