Technology uncertainty and learning by doing in the cellulosic biofuel investment

This study investigates the impacts of technology uncertainties and learning curve on investment decisions in the cellulosic biofuel industry. We find the future success of cellulosic biofuel may depend on the learning by doing effects rather than expected advances in conversion technology. The anticipated technology breakthroughs may even further delay investment decisions because the firm has incentives to wait until the breakthrough is realized. If the government wants to trigger commercialized production through the promotion of learning effects, an enforced mandate level of at least 500 million gallons may be needed.

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JEL Codes:
Q42; Q48; Q55

 Record created 2017-04-01, last modified 2020-10-28

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