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.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34756.
Date of creation: 01 May 2012
Date of revision:
Publication status: Published in American Journal of Agricultural Economics, February 2012,
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Investment; cellulosic biofuels; Renewable Identification Numbers; waivable mandate.;
Other versions of this item:
- Ruiqing Miao & David A. Hennessy & Bruce A. Babcock, 2012. "Investment in Cellulosic Biofuel Refineries: Do Waivable Biofuel Mandates Matter?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 750-762.
- 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.
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