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The Economics of Biofuel Policy and Biotechnology

Author

Listed:
  • Hochman Gal

    (The Technion - Visiting UC Berkeley)

  • Sexton Steven E

    (University of California - Berkeley)

  • Zilberman David D

    (University of California - Berkeley)

Abstract

This paper employs a partial equilibrium trade framework to show that biofuel policy can substitute for traditional agricultural policy intended to boost farm welfare. It also shows how food market volatility can induce periods of boom and bust in the ethanol industry, causing episodes of bankruptcy and reduced capital investment. This paper further models the effects of two specific technological innovationscellulosic ethanol and agricultural biotechnologyon food and fuel markets and demonstrates that technology can reduce ethanol market volatility. A parameterized model is used to characterize the impacts of biofuels on food and fuel markets.

Suggested Citation

  • Hochman Gal & Sexton Steven E & Zilberman David D, 2008. "The Economics of Biofuel Policy and Biotechnology," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(2), pages 1-24, December.
  • Handle: RePEc:bpj:bjafio:v:6:y:2008:i:2:n:8
    as

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    References listed on IDEAS

    as
    1. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2011. "Biofuels: Review of Policies and Impacts," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5v1112qr, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Bahel, Eric & Marrouch, Walid & Gaudet, Gérard, 2013. "The economics of oil, biofuel and food commodities," Resource and Energy Economics, Elsevier, vol. 35(4), pages 599-617.
    3. repec:eee:renene:v:114:y:2017:i:pb:p:394-407 is not listed on IDEAS
    4. Castiblanco, Carmenza & Moreno, Alvaro & Etter, Andrés, 2015. "Impact of policies and subsidies in agribusiness: The case of oil palm and biofuels in Colombia," Energy Economics, Elsevier, vol. 49(C), pages 676-686.
    5. Eggert, Håkan & Greaker, Mads & Potter, Emily, 2011. "Policies for Second Generation Biofuels: Current status and future challenges," Working Papers in Economics 501, University of Gothenburg, Department of Economics.
    6. Karel Janda & Ladislav Kristoufek & David Zilberman, 2011. "Modeling the Environmental and Socio-Economic Impacts of Biofuels," Working Papers IES 2011/33, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
    7. Jason Fewell & Cole Gustafson, 2010. "Do lender-imposed sweeps affect ethanol technology investment?," Agricultural Finance Review, Emerald Group Publishing, vol. 70(2), pages 169-183, August.
    8. Hakan Eggert & Mads Greaker, 2014. "Promoting Second Generation Biofuels: Does the First Generation Pave the Road?," Energies, MDPI, Open Access Journal, vol. 7(7), pages 1-16, July.
    9. María Blanco & Marcel Adenäuer & Shailesh Shrestha & Arno Becker, 2012. "Methodology to assess EU Biofuel Policies: The CAPRI Approach," JRC Working Papers JRC80037, Joint Research Centre (Seville site).
    10. Sarah C. Davis & Derek Kauneckis & Natalie A. Kruse & Kimberley E. Miller & Michael Zimmer & Geoffrey D. Dabelko, 2016. "Closing the loop: integrative systems management of waste in food, energy, and water systems," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 6(1), pages 11-24, March.
    11. Cheteni, Priviledge, 2017. "Sustainability development: Biofuels in agriculture," MPRA Paper 80969, University Library of Munich, Germany, revised 24 Jun 2017.
    12. Azad, A.K. & Rasul, M.G. & Khan, M.M.K. & Sharma, Subhash C. & Mofijur, M. & Bhuiya, M.M.K., 2016. "Prospects, feedstocks and challenges of biodiesel production from beauty leaf oil and castor oil: A nonedible oil sources in Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 302-318.
    13. Gal Hochman & Scott Kaplan & Deepak Rajagopal & David Zilberman, 2012. "Biofuel and Food-Commodity Prices," Agriculture, MDPI, Open Access Journal, vol. 2(3), pages 1-10, September.
    14. Hochman, Gal & Rajagopal, Deepak & Timilsina, Govinda & Zilberman, David, 2011. "The role of inventory adjustments in quantifying factors causing food price inflation," Policy Research Working Paper Series 5744, The World Bank.
    15. Sparks, G.D. & Ortmann, Gerald F. & Lagrange, L., 2010. "An Economic Evaluation of Soybean-Based Biodiesel Production on Commercial Farms in the Soybean-Producing Regions of KwaZulu-Natal: Some Preliminary Results," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95980, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    16. Nicholas Apergis & Sofia Eleftheriou & Dimitrios Voliotis, 2017. "Asymmetric Spillover Effects between Agricultural Commodity Prices and Biofuel Energy Prices," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 166-177.

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