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Explaining Investment Decisions in the South African Biofuels Industry: A Game Theoretic Approach

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  • Funke, Thomas
  • Klein, Peter G.

Abstract

The production of biofuels and the establishment of a biofuels industry in South Africa have largely been hampered by the structure, procedures and requirements as set out in the Industrial Biofuel Strategy. This article sketches the industry by means of a game theoretic representation. A model is developed that represents the rational strategies of various role players in the industry with respect to investor decision making. In reality this did not occur and the article develops and documents a variable, σ, which in turn helps to represent the current state of affairs. The study explains why current investment decisions in the industry have been made and why certain role players remain indifferent towards any commitment.

Suggested Citation

  • Funke, Thomas & Klein, Peter G., 2010. "Explaining Investment Decisions in the South African Biofuels Industry: A Game Theoretic Approach," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95978, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae10:95978
    DOI: 10.22004/ag.econ.95978
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    References listed on IDEAS

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    1. Meyer, Ferdinand H. & Strauss, P.G. & Funke, Thomas, 2008. "Modelling the impacts of macro-economic variables on the South African biofuels industry," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(3), pages 1-19, September.
    2. Mikhael Shor, 2003. "Game Theory .net," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(4), pages 388-388, December.
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    Cited by:

    1. Sokolovskyi, Dmytro & Sokolovska, Olena, 2013. "The problem of arising the Pareto inefficient norm in relations “investor – government” type," MPRA Paper 44745, University Library of Munich, Germany.

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