Empirical Analysis of Scoring Auctions for Oil and Gas Leases

I study a scoring auctions implemented in Brazil to sell oil exploration rights. Differently from most sales of this kind, bidders had to submit a multi-dimensional bid that included a bonus and an exploratory program. A... [ view full abstract ]

I study a scoring auctions implemented in Brazil to sell oil exploration rights. Differently from most sales of this kind, bidders had to submit a multi-dimensional bid that included a bonus and an exploratory program. A non-linear scoring rule determined the winner. I propose a method to estimate the underlying primitive distribution of tract values and exploration commitment costs. Estimating the distribution of those primitives allows the evaluation of counterfactual revenues in alternative bidding schemes. I find that a first price auction would imply a 9.7% higher revenue from the sales examined.