Technological Change, Institutional Stickiness and Changing Political Coalitions: The Shift to Horizontal Hydraulic Fracturing
26 Pages Posted: 27 Aug 2013
Date Written: 2013
In common-pool resource settings, political institutions can act to constrain individual behavior and prevent tragedies of the commons. However, these institutions also act as distributive mechanisms; by defining the scope of property rights, institutions can favor one group of resource users over another, producing group conflict at both the design and implementation stages. While scholars have frequently examined the distributional consequences new institutions, less work has examined the consequences of technological change under a stable institution. This paper develops a model of resource users in US oil and gas plays to demonstrate that the sudden rise in opposition to the use of compulsory or “forced” pooling institutions in shale plays under the technology of high volume horizontal hydraulic fracturing can be explained as a result of the shifting payoffs to some landowners. While compulsory pooling has been used for decades in conventional plays without much controversy, the nature of technological change and new expected payoff structure has created a new political conflict.
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