Biofuels And Leakages In The Fuel Market
Leakage in the fuel market differs, depending on whether ethanol production is determined by a tax credit or consumption mandate. Two components of market leakage are distinguished: domestic and international. Leakage with both a tax credit and a consumption mandate depends on market elasticities and consumption/production shares, with the former having a bigger impact. Leakage is also more sensitive to changes in market supply and demand elasticities in the country not introducing biofuels. Although positive with a tax credit, market leakage can be negative with a consumption mandate, meaning that one gallon of ethanol can replace more than a gallon of gasoline. We also show that being a small country biofuels producer does not necessarily mean that leakage for this country is 100 percent. Our numerical estimates show that one gallon of ethanol replaces approximately 0.2-0.3 gallons of gasoline in the U.S.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://iatrcweb.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harry de Gorter & David R. Just, 2008. "The Economics of a Blend Mandate for Biofuels," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 738-750.
- Lapan, Harvey E. & Moschini, GianCarlo, 2009. "Biofuels Policies and Welfare: Is the Stick of Mandates Better Than the Carrot of Subsidies?," Staff General Research Papers 13076, Iowa State University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ags:iatr10:91265. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.