Investment in Cellulosic Biofuel Refineries: Do Waivable Biofuel Mandates Matter?
AbstractWe develop a conceptual model to study the impact of mandate policies on stimulating investment in cellulosic biofuel refineries. In a two-period framework, we compare the first-period investment level (FIL) under three scenarios: laissez-faire, non-waivable mandate (NWM) policy, and waivable mandate (WM) policy. Results show that when plant-level marginal costs are increasing then both NWM policy and WM policy may stimulate FIL. The WM policy has a smaller impact than does the NWM policy. When the plant-level marginal costs are constants, however, WM policy does not increase FIL but does increase the expected profit of more efficient investors. Copyright 2012, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 94 (2012)
Issue (Month): 3 ()
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Other versions of this item:
- Miao, Ruiqing & Hennessy, David A. & Babcock, Bruce A., 2012. "Investment in Cellulosic Biofuel Refineries: Do Waivable Biofuel Mandates Matter?," Staff General Research Papers 34756, Iowa State University, Department of Economics.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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- Moschini, GianCarlo & Cui, Jingbo & Lapan, Harvey E., 0.
"Economics of Biofuels: An Overview of Policies, Impacts and Prospects,"
Bio-based and Applied Economics Journal,
Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
- Moschini, GianCarlo & Cui, Jingbo & Lapan, Harvey, 2012. "Economics of Biofuels: An Overview of Policies, Impacts and Prospects," Staff General Research Papers 35548, Iowa State University, Department of Economics.
- Tristan Skolrud & Gregmar Galinato & Suzette Galinato & Richard Shumway & Jonathan Yoder, 2014. "The Role of Market Structure and Federal Renewable Fuel Standards in the Growth of the Cellulosic Biofuel Sector," Working Papers 2014-02, School of Economic Sciences, Washington State University.
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