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Ethanol Plant Investment in Canada: A Structural Model

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  • Lin, C.-Y. Cynthia
  • Yi, Fujin

Abstract

Most of the fuel ethanol plants in Canada were built recently and either use corn or wheat as feedstock. It is important to determine what factors affect decisions about when and where to invest in building new ethanol plants and which feedstock is chosen as feedstock. In this paper we model the decision to invest in ethanol plants using a structural model of a dynamic game. We find that competition between plants is enough to deter local investments, the availability of feedstock is important in determining plant location, and the effects of policy support for wheat-based plants are significant.

Suggested Citation

  • Lin, C.-Y. Cynthia & Yi, Fujin, 2012. "Ethanol Plant Investment in Canada: A Structural Model," Institute of Transportation Studies, Working Paper Series qt7vd043zr, Institute of Transportation Studies, UC Davis.
    • Handle: RePEc:cdl:itsdav:qt7vd043zr
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    References listed on IDEAS

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    2. Kenkel, Philip L. & Holcomb, Rodney B., 2006. "Challenges to Producer Ownership of Ethanol and Biodiesel Production Facilities," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(2), pages 1-7, August.
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    5. Schmit, T.M. & J., Luo & Conrad, J.M., 2011. "Estimating the influence of U.S. ethanol policy on plant investment decisions: A real options analysis with two stochastic variables," Energy Economics, Elsevier, vol. 33(6), pages 1194-1205.
    6. Lambert, D.M. & Wilcox, M. & English, A. & Stewart, L., 2008. "Ethanol Plant Location Determinants and County Comparative Advantage," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(1), pages 117-135, April.
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    Cited by:

    1. Rojas Valdes, Ruben I. & Lin Lawell, C.-Y. Cynthia & Taylor, J. Edward, 2017. "The Dynamic Migration Game: A Structural Econometric Model and Application to Rural Mexico," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259184, Agricultural and Applied Economics Association.
    2. Sears, Louis S. & Lin Lawell, C.-Y. Cynthia & Walter, M. Todd, 2020. "Groundwater Under Open Access: A Structural Model of the Dynamic Common Pool Extraction Game," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304276, Agricultural and Applied Economics Association.
    3. Kheiravar, Khaled H, 2019. "Economic and Econometric Analyses of the World Petroleum Industry, Energy Subsidies, and Air Pollution," Institute of Transportation Studies, Working Paper Series qt3gj151w9, Institute of Transportation Studies, UC Davis.

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