|
AgEcon Search >
Journal of Agricultural and Applied Economics >
Volume 42, Number 01, February 2010 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/57157
|
| Title: | The Relative Impacts of U.S. Bio-Fuel Policies on Fuel-Energy Markets: A Comparative Static Analysis |
| Authors: | Kim, C.S.
Schaible, Glenn D.
Daberkow, Stan G. |
| Keywords: | bio-fuel tax credits
blended gasoline
blender’s market power
mandated blending
tariff |
| JEL Codes: | Q11
Q21
Q42
Q48 |
| Issue Date: | 2010-02 |
| Abstract: | Rapidly declining gasoline prices from their record high during the summer of 2008,
while ethanol prices remained relatively high, made it difficult for many bio-fuel policy
modelers to fully explain the impacts of U.S. bio-fuel policies on fuel prices. Using profit-maximization
models for blenders, refiners, and distillers, we conduct a comparative static
analysis to measure the relative magnitudes of the impacts of tax credits and blending
mandates on fuel-energy market equilibrium prices. Our results indicate that first, the prices
of all fuels including conventional gasoline, ethanol, and blended gasoline decline as the biofuel
tax credit increases, but they increase as the rate of the blending mandate increases.
Second, the shadow value of a blending mandate represents the marginal rate of substitution
between the marginal price change associated with a blending mandate and the marginal
price change associated with a bio-fuel tax credit. Therefore, bio-fuel policies can affect the
prices of all fuels including conventional gasoline, ethanol, and blended gasoline. Finally,
ethanol imports are affected by domestic blender’s market-power effects, more than by the
import duty imposed to offset the tax credit associated with the use of imported ethanol in the
blending process. |
| URI: | http://purl.umn.edu/57157 |
| Institution/Association: | Journal of Agricultural and Applied Economics>Volume 42, Number 01, February 2010 |
| Total Pages: | 12 |
| From Page: | 121 |
| To Page: | 132 |
| Collections: | Volume 42, Number 01, February 2010
|
Files in This Item:
| File |
Description |
Size | Format |
|---|
| jaae286.pdf | | 699Kb | PDF | View/Open |
|
Recommend this item
All items in AgEcon Search are protected by copyright.
|
