Introduction

This chapter examines the effect on competition of permitting joint ventures to bid in federal offshore oil and gas leasing sales. Western economists and policy makers generally contend that competition is desirable, since it promotes, in the absence of outside controls, efficient allocation and use of resources. Advocates of joint venture bidding stress the enormous costs and risks involved in exploring for offshore oil. Joint bidding, whether by major or independent oil companies, is permitted because joint ventures are an established approach to mineral exploration. Competition between firms is, after all, accounted a principal virtue of private economic activity, operating as a stimulus to improved methods and as a safeguard against indifference to the wishes of the consumers. The arguments for and against joint venture bidding tend to rely upon the effect of joint ventures on the number of bidders in a sale.