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Renewable energy - new forces in global ethanol trade?

Author

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  • Salamon, Petra
  • Ledebur, Oliver von
  • Elmahdi, Kamal
  • Klepper, Rainer

Abstract

The paper presents an extended gravity equation application for the global trade with ethanol. The background and different attempts for a theoretical foundation of the standard approach are discussed. The econometric work takes regional integration schemes into account, as well as the influence of the production factor agricultural land and the level of oil prices on the world market. Results indicate that global bilateral trade flows of ethanol can be explained by a set of comprehensive explanatory variables, including regional agreements and the price level of oil. From a global perspective the EU effect on trade flows is trade diverting as the regional agreement reduces the linkage to world markets and increases the intra-regional level of trade with ethanol. The analysis over time however indicates that the decoupling of the EU ethanol market from the world market is decreasing, potentially reflecting demand increases within the EU.

Suggested Citation

  • Salamon, Petra & Ledebur, Oliver von & Elmahdi, Kamal & Klepper, Rainer, 2006. "Renewable energy - new forces in global ethanol trade?," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10045, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae98:10045
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    File URL: http://purl.umn.edu/10045
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    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    2. Gary R. Saxonhouse, 1993. "Pricing Strategies and Trading Blocs in East Asia," NBER Chapters,in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 89-124 National Bureau of Economic Research, Inc.
    3. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    4. Grant, Jason H. & Lambert, Dayton M., 2005. "Regionalism in World Agricultural Trade: Lessons from Gravity Model Estimation," 2005 Annual meeting, July 24-27, Providence, RI 19269, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Jeffrey Frankel & Miles Kahler, 1993. "Regionalism and Rivalry: Japan and the United States in Pacific Asia," NBER Books, National Bureau of Economic Research, Inc, number fran93-1.
    6. Gary R. Saxonhouse, 1989. "Differentiated Products, Economies of Scale, and Access to the Japanese Market," NBER Chapters,in: Trade Policies for International Competitiveness, pages 145-184 National Bureau of Economic Research, Inc.
    7. Oecd, 2006. "Agricultural Market Impacts of Future Growth in the Production of Biofuels," OECD Papers, OECD Publishing, vol. 6(1), pages 1-57.
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