IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i17p9899-d628164.html
   My bibliography  Save this article

Analysis of Hydrous Ethanol Price Competitiveness after the Implementation of the Fossil Fuel Import Price Parity Policy in Brazil

Author

Listed:
  • Aloisio S. Nascimento Filho

    (Gestão e Tecnologia Industrial (PPG GETEC), Centro Universitário SENAI CIMATEC, Salvador 41650-010, Brazil
    Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil)

  • Hugo Saba

    (Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil
    Modelagem Computacional e Tecnologia Industrial (PPG MCTI), Centro Universitário SENAI CIMATEC, Salvador 41650-010, Brazil
    Departamento de Ciências da Terra, Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil)

  • Rafael G. O. dos Santos

    (Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil
    Departamento de Desenvolvimento de Produtos, Centro Universitário SENAI CIMATEC, Salvador 41650-010, Brazil)

  • João Gabriel A. Calmon

    (Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil
    Departamento de Micro Eletrônica, Centro Universitário SENAI CIMATEC, Salvador 41650-010, Brazil)

  • Marcio L. V. Araújo

    (Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil
    PROFNIT, Instituto Federal da Bahia—IFBA, Salvador 40301-015, Brazil)

  • Eduardo M. F. Jorge

    (Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil
    Departamento de Ciências da Terra, Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil)

  • Thiago B. Murari

    (Gestão e Tecnologia Industrial (PPG GETEC), Centro Universitário SENAI CIMATEC, Salvador 41650-010, Brazil
    Núcleo de Pesquisa Aplicada e Inovação (NPAI), Universidade do Estado da Bahia—UNEB, Salvador 41741-020, Brazil)

Abstract

Competition is a relevant element in any open economy. Public policies are necessary to induce economic efficiency and to create conditions to preserve or stimulate a competitive environment. This paper aims to assess the competitiveness of hydrous ethanol price in a period of political, social and economic crises, in 15 Brazilian state capitals between the years 2012 and 2019. We compared the ethanol–gasoline price ratio behavior in two different periods, before and after the import parity price policy implemented by Petrobras in 2016. Mann–Whitney and Levene’s tests, two non-parametric statistical methods, were applied to verify significant changes between these periods. The implementation of changes in Petrobras’ pricing policy from 2016 onwards caused a statistically significant increase in the ratio coefficient of variation in two-thirds of the distribution market and more than the half of analyzed retail markets. Second, overall, the cities that showed statistically significant changes in the median and coefficient of variation in the distribution market price ratio were followed by the retail market. Our findings suggest that government interventions in the fuel and byproduct final selling prices to distributors negatively impact competition between companies that are part of the fuel distribution and retail chain, also affecting the sale of biofuels in Brazil and discouraging the initiatives to use renewable fuels to reduce the emission of pollutants.

Suggested Citation

  • Aloisio S. Nascimento Filho & Hugo Saba & Rafael G. O. dos Santos & João Gabriel A. Calmon & Marcio L. V. Araújo & Eduardo M. F. Jorge & Thiago B. Murari, 2021. "Analysis of Hydrous Ethanol Price Competitiveness after the Implementation of the Fossil Fuel Import Price Parity Policy in Brazil," Sustainability, MDPI, vol. 13(17), pages 1-12, September.
  • Handle: RePEc:gam:jsusta:v:13:y:2021:i:17:p:9899-:d:628164
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/17/9899/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/13/17/9899/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lucas W. Davis, 2014. "The Economic Cost of Global Fuel Subsidies," American Economic Review, American Economic Association, vol. 104(5), pages 581-585, May.
    2. Balaguer, Jacint & Ripollés, Jordi, 2020. "Do classes of gas stations contribute differently to fuel prices? Evidence to foster effective competition in Spain," Energy Policy, Elsevier, vol. 139(C).
    3. Dieter Pennerstorfer, 2009. "Spatial price competition in retail gasoline markets: evidence from Austria," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 133-158, March.
    4. Rodrigues, Niágara & Losekann, Luciano & Silveira Filho, Getulio, 2018. "Demand of automotive fuels in Brazil: Underlying energy demand trend and asymmetric price response," Energy Economics, Elsevier, vol. 74(C), pages 644-655.
    5. João Sicsú & Andre de Melo Modenesi & Débora Pimentel, 2021. "Severe recession with inflation: the case of Brazil," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 44(1), pages 89-111, January.
    6. Sam Peltzman, 2000. "Prices Rise Faster than They Fall," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 466-502, June.
    7. Arze del Granado, Francisco Javier & Coady, David & Gillingham, Robert, 2012. "The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries," World Development, Elsevier, vol. 40(11), pages 2234-2248.
    8. Karina Pallagst & José Vargas-Hernández & Patricia Hammer, 2019. "Green Innovation Areas—En Route to Sustainability for Shrinking Cities?," Sustainability, MDPI, vol. 11(23), pages 1-17, November.
    9. El Montasser, Ghassen & Gupta, Rangan & Martins, Andre Luis & Wanke, Peter, 2015. "Are there multiple bubbles in the ethanol–gasoline price ratio of Brazil?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 19-23.
    10. Khanna, Madhu & Nuñez, Hector M. & Zilberman, David, 2016. "Who pays and who gains from fuel policies in Brazil?," Energy Economics, Elsevier, vol. 54(C), pages 133-143.
    11. Ladislav Kristoufek & Karel Janda & David Zilberman, 2015. "Co-movements of Ethanol Related Prices: Evidence from Brazil and the USA," CAMA Working Papers 2015-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    12. Ray, Sourav & Chen, Haipeng (Allan) & Bergen, Mark & Levy, Daniel, 2006. "Asymmetric Wholesale Pricing: Theory and Evidence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 25(2), pages 109-201.
    13. Cardoso, Leonardo C.B. & Bittencourt, Maurício V.L. & Litt, Wade H. & Irwin, Elena G., 2019. "Biofuels policies and fuel demand elasticities in Brazil," Energy Policy, Elsevier, vol. 128(C), pages 296-305.
    14. Nascimento Filho, A.S. & Pereira, E.J.A.L. & Ferreira, Paulo & Murari, T.B. & Moret, M.A., 2018. "Cross-correlation analysis on Brazilian gasoline retail market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 508(C), pages 550-557.
    15. Arzaghi, Mohammad & Squalli, Jay, 2015. "How price inelastic is demand for gasoline in fuel-subsidizing economies?," Energy Economics, Elsevier, vol. 50(C), pages 117-124.
    16. Su, Chi-Wei & Huang, Shi-Wen & Qin, Meng & Umar, Muhammad, 2021. "Does crude oil price stimulate economic policy uncertainty in BRICS?," Pacific-Basin Finance Journal, Elsevier, vol. 66(C).
    17. Nilsa Duarte da Silva Lima & Irenilza de Alencar Nääs & João Gilberto Mendes dos Reis & Raquel Baracat Tosi Rodrigues da Silva, 2020. "Classifying the Level of Energy-Environmental Efficiency Rating of Brazilian Ethanol," Energies, MDPI, vol. 13(8), pages 1-16, April.
    18. Scheidgen, Katharina & Gümüsay, Ali Aslan & Günzel-Jensen, Franziska & Krlev, Gorgi & Wolf, Miriam, 2021. "Crises and entrepreneurial opportunities: Digital social innovation in response to physical distancing," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    19. Thiago B. Murari & Aloisio S. Nascimento Filho & Eder J.A.L. Pereira & Paulo Ferreira & Sergio Pitombo & Hernane B.B. Pereira & Alex A.B. Santos & Marcelo A. Moret, 2019. "Comparative Analysis between Hydrous Ethanol and Gasoline C Pricing in Brazilian Retail Market," Sustainability, MDPI, vol. 11(17), pages 1-12, August.
    20. Matthew Lewis, 2008. "Price Dispersion And Competition With Differentiated Sellers," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 654-678, September.
    21. Ian Parry, 2018. "Fossil-fuel subsidies assessed," Nature, Nature, vol. 554(7691), pages 175-176, February.
    22. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 305-339.
    23. Khan, Khalid & Su, Chi-Wei & Umar, Muhammad & Yue, Xiao-Guang, 2021. "Do crude oil price bubbles occur?," Resources Policy, Elsevier, vol. 71(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rafael Baptista Palazzi & Ata Assaf & Marcelo Cabus Klotzle, 2024. "Dynamic connectedness between energy markets and the Brazilian cash market: An empirical analysis pre‐ and post‐COVID‐19," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 44(1), pages 27-56, January.
    2. Aloisio S. Nascimento Filho & Rafael G. O. dos Santos & João Gabriel A. Calmon & Peterson A. Lobato & Marcelo A. Moret & Thiago B. Murari & Hugo Saba, 2022. "Induction of a Consumption Pattern for Ethanol and Gasoline in Brazil," Sustainability, MDPI, vol. 14(15), pages 1-11, July.
    3. Palazzi, Rafael Baptista & Meira, Erick & Klotzle, Marcelo Cabus, 2022. "The sugar-ethanol-oil nexus in Brazil: Exploring the pass-through of international commodity prices to national fuel prices," Journal of Commodity Markets, Elsevier, vol. 28(C).
    4. Derick David Quintino & Heloisa Lee Burnquist & Paulo Ferreira, 2022. "Relative Prices of Ethanol-Gasoline in the Major Brazilian Capitals: An Analysis to Support Public Policies," Energies, MDPI, vol. 15(13), pages 1-23, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Noel, Michael D. & Qiang, Hongjie, 2019. "The role of information in retail gasoline price dispersion," Energy Economics, Elsevier, vol. 80(C), pages 173-187.
    2. Remer, Marc, 2015. "An empirical investigation of the determinants of asymmetric pricing," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 46-56.
    3. Jordi Perdiguero-García, 2010. "“Symmetric or asymmetric gasoline prices? A metaanalysis approach”," IREA Working Papers 201013, University of Barcelona, Research Institute of Applied Economics, revised Nov 2010.
    4. LeSage, James P. & Vance, Colin & Chih, Yao-Yu, 2017. "A Bayesian heterogeneous coefficients spatial autoregressive panel data model of retail fuel duopoly pricing," Regional Science and Urban Economics, Elsevier, vol. 62(C), pages 46-55.
    5. Matthew S. Lewis, 2011. "Asymmetric Price Adjustment and Consumer Search: An Examination of the Retail Gasoline Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 409-449, June.
    6. Javier Tasso, 2019. "The Bigger the Stickier: Asymmetric Adjustment to Negative Demand Shocks," Asociación Argentina de Economía Política: Working Papers 4203, Asociación Argentina de Economía Política.
    7. Lim, Yoonsung & Kim, Jeong-Yoo & Berg, Nathan, 2015. "Price asymmetry revisited from a marketing perspective," Economic Modelling, Elsevier, vol. 49(C), pages 314-319.
    8. Mr. Kangni R Kpodar & Mr. Chadi Abdallah, 2016. "Dynamic Fuel Price Pass-Through: Evidence from a New Global Retail Fuel Price Database," IMF Working Papers 2016/254, International Monetary Fund.
    9. da Silva, André Suriane & Vasconcelos, Cláudio Roberto Fóffano & Vasconcelos, Silvinha Pinto & de Mattos, Rogério Silva, 2014. "Symmetric transmission of prices in the retail gasoline market in Brazil," Energy Economics, Elsevier, vol. 43(C), pages 11-21.
    10. Lucas W. Davis, 2017. "The Environmental Cost of Global Fuel Subsidies," The Energy Journal, , vol. 38(1_suppl), pages 7-28, June.
    11. Derick David Quintino & Heloisa Lee Burnquist & Paulo Jorge Silveira Ferreira, 2021. "Carbon Emissions and Brazilian Ethanol Prices: Are They Correlated? An Econophysics Study," Sustainability, MDPI, vol. 13(22), pages 1-18, November.
    12. Firgo, Matthias & Pennerstorfer, Dieter & Weiss, Christoph R., 2015. "Centrality and pricing in spatially differentiated markets: The case of gasoline," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 81-90.
    13. Kpodar, Kangni & Abdallah, Chadi, 2017. "Dynamic fuel price pass-through: Evidence from a new global retail fuel price database," Energy Economics, Elsevier, vol. 66(C), pages 303-312.
    14. Monasterolo, Irene & Raberto, Marco, 2019. "The impact of phasing out fossil fuel subsidies on the low-carbon transition," Energy Policy, Elsevier, vol. 124(C), pages 355-370.
    15. Leonardo C. B. Cardoso & Carlos Frederico A. Uchôa & Williams Huamani & David R. Just & Raúl V. Gomez, 2022. "Price effects of spatial competition in retail fuel markets: the impact of a new rival nearby," Papers in Regional Science, Wiley Blackwell, vol. 101(1), pages 81-105, February.
    16. Chadi ABDALLAH & Roland Kangni KPODAR, 2016. "Dynamic Fuel Price Pass-Through : Evidence from a New Global Retail Fuel Price Database," Working Papers 3669, FERDI.
    17. Ghoddusi, Hamed & Morovati, Mohammad & Rafizadeh, Nima, 2022. "Dynamics of fuel demand elasticity: Evidence from Iranian subsidy reforms," Energy Economics, Elsevier, vol. 110(C).
    18. Georg Müller & Sourav Ray, 2007. "Asymmetric price adjustment: evidence from weekly product-level scanner price data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 723-736.
    19. Bello, Alejandro & Contín-Pilart, Ignacio, 2012. "Taxes, cost and demand shifters as determinants in the regional gasoline price formation process: Evidence from Spain," Energy Policy, Elsevier, vol. 48(C), pages 439-448.
    20. Erica Myers & AJ Bostian & Harrison Fell, 2021. "Asymmetric Cost Pass‐Through in Multi‐Unit Procurement Auctions: An Experimental Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 109-130, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:17:p:9899-:d:628164. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.