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Changes in institutional design and extraction path

Published online by Cambridge University Press:  01 June 2018

Mohammad Kemal
Affiliation:
SKKMIGAS, Jakarta, Indonesia
Ian Lange*
Affiliation:
Division of Economics and Business, Colorado School of Mines, Golden, Colorado, USA
*
*Corresponding author. E-mail: ilange@mines.edu

Abstract

The impact of oil governance on the extraction path of non-renewable resources is theoretically ambiguous. By employing field-level data in the South East Asia region, we utilize a change in the institutional design of oil governance in Indonesia to determine its impact on oil and gas extraction paths. From the empirical results, we infer that the move to create a separate regulatory agency and make the national oil company a purely business entity led to a reduction in the extraction path of oil, the size of which varies for different sizes of resource stock. This finding reiterates the importance of strengthening ownership rights for non-renewable resources to avoid over-extraction and facilitate more sustainable economic outcomes.

Type
Research Article
Copyright
Copyright © Cambridge University Press 2018 

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