Ethanol Trade between Brazil and the United States

The United States has used tax credit and mandate to promote ethanol production. To offset the tax credit availed by the imported ethanol, the United States instituted an import tariff. This study ascertains the appropriate U.S. ethanol import tariff corresponding to the U.S. domestic policies by setting the policy-induced ethanol price equal to the free market price. The theoretical results from a horizontally-related ethanol-gasoline partial equilibrium model of three countries (the United States, Brazil, and the Rest of the World) show that the United States should provide an import subsidy rather than impose a tariff. The empirical results quantify that this import subsidy is $0.10, instead of a $0.57 import tariff, per gallon of ethanol.


Issue Date:
2010
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/60889
PURL Identifier:
http://purl.umn.edu/60889
Page range:
1-28
Total Pages:
28
JEL Codes:
F13
Series Statement:
Selected Paper
10889




 Record created 2017-04-01, last modified 2018-01-22

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