Learning by Viewing? Social Learning, Regulatory Disclosure, and Firm Productivity in Shale Gas
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.
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Copy CitationT. Robert Fetter, Andrew L. Steck, Christopher Timmins, and Douglas Wrenn, "Learning by Viewing? Social Learning, Regulatory Disclosure, and Firm Productivity in Shale Gas," NBER Working Paper 25401 (2018), https://doi.org/10.3386/w25401.Download Citation
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Non-Technical Summaries
- Mandatory disclosure of chemicals in fracking fluids allows competitors to catch up to industry leaders but depresses experimentation...
Published Versions
Theodore Robert Fetter & Andrew Steck & Christopher Timmins & Douglas Wrenn, 2017. "Learning by Viewing? Social Learning, Regulatory Disclosure and Firm Productivity in Shale Gas," Academy of Management Proceedings, vol 2017(1).
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