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Spatial Competition and Economics of Biofuels from Corn Stover

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  • Sesmero, Juan
  • Balagtas, Joseph Valdes
  • Pratt, Michelle

Abstract

This paper develops a model of spatial competition nesting the classical Zhang and Sexton (2001) duopsony and spatial monopsony in order to evaluate the effects of alternative stover market structures on stover prices, supply of biofuels, and firm profits. We show theoretically, as well as in an empirical implementation calibrated to reflect supply conditions in Indiana, that spatial competition may significantly increase feedstock cost, reduce profits of biofuels plants, and decrease a plant’s optimal scale of production and supply elasticity.

Suggested Citation

  • Sesmero, Juan & Balagtas, Joseph Valdes & Pratt, Michelle, 2014. "Spatial Competition and Economics of Biofuels from Corn Stover," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170595, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:170595
    DOI: 10.22004/ag.econ.170595
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    References listed on IDEAS

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    Keywords

    Industrial Organization; Production Economics; Resource /Energy Economics and Policy;
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