Learning by Viewing? Social Learning, Regulatory Disclosure, and Firm Productivity in Shale Gas

66 Pages Posted: 26 Dec 2018

See all articles by T. Robert Fetter

T. Robert Fetter

Duke University - Nicholas School of the Environment

Andrew Steck

University of Toronto

Christopher Timmins

Duke University - Department of Economics

Douglas H. Wrenn

Pennsylvania State University, Agricultural Economics, Sociology, and Education

Date Written: December 2018

Abstract

In many industries firms can learn about new technologies from other adopters; mandatory disclosure regulations represent an understudied channel for this type of social learning. We study an environmentally-focused law in the shale gas industry to examine firm claims that disclosure requirements expose valuable trade secrets. Our research design takes advantage of a unique regulatory history that allows us to observe complete information on chemical inputs prior to disclosure, along with the timing of information availability for thousands of wells after disclosure takes effect. We find that firms’ chemical choices following disclosure converge in a manner consistent with inter-firm imitation and that this leads to more productive wells for firms that carefully choose whom to copy — but also a decline in innovation among the most productive firms, whose innovations are those most often copied by other firms. Our results suggest there is a long-run welfare trade-off between the potential benefits of information diffusion and transparency, and the potential costs of reduced innovation.

Suggested Citation

Fetter, T. Robert and Steck, Andrew and Timmins, Christopher D. and Wrenn, Douglas H., Learning by Viewing? Social Learning, Regulatory Disclosure, and Firm Productivity in Shale Gas (December 2018). NBER Working Paper No. w25401, Available at SSRN: https://ssrn.com/abstract=3306114

T. Robert Fetter (Contact Author)

Duke University - Nicholas School of the Environment ( email )

Box 90328
Durham, NC 27708-0328
United States

Andrew Steck

University of Toronto

Toronto, M5S 3G8
Canada

Christopher D. Timmins

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1809 (Phone)
919-684-8974 (Fax)

Douglas H. Wrenn

Pennsylvania State University, Agricultural Economics, Sociology, and Education ( email )

University Park, PA 16802-3306
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
7
Abstract Views
169
PlumX Metrics