IDEAS home Printed from https://ideas.repec.org/p/ias/cpaper/16-wp562.html
   My bibliography  Save this paper

Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists

Author

Listed:
  • Kenneth Liao
  • Sebastien Pouliot
  • Bruce A. Babcock

Abstract

Compliance with the Renewable Fuel Standard (RFS) in United States will require price incentives for a substantial number of motorists with flex-fuel vehicles to switch to high ethanol-gasoline blends. Existing estimates of motorists' willingness to pay for high-ethanol blends use data from Brazil, data generated when prices greatly favored low-ethanol blends, or stated preference data collected from mail and online surveys. We conducted an intercept survey of flex motorists as they refueled in five US states. We overcome the problem caused by sample prices favoring low-ethanol blends by augmenting revealed preference data with stated preference data. A sample-selection problem arises because motorists with high willingness to pay seek out the relatively few stations that sell high-ethanol blends. We use responses from two questions to inform sample selection. We find the average US motorist requires a substantial discount to switch to high ethanol blends beyond the price that equates the cost per mile of driving.

Suggested Citation

  • Kenneth Liao & Sebastien Pouliot & Bruce A. Babcock, 2018. "Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists," Center for Agricultural and Rural Development (CARD) Publications 16-wp562, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:16-wp562
    as

    Download full text from publisher

    File URL: https://www.card.iastate.edu/products/publications/pdf/16wp562.pdf
    File Function: Full Text
    Download Restriction: no
    File URL: https://www.card.iastate.edu/products/publications/synopsis/?p=1242
    File Function: Online Synopsis
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Anderson, Soren T., 2012. "The demand for ethanol as a gasoline substitute," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 151-168.
    2. Aguilar, Francisco X. & Cai, Zhen & Mohebalian, Phillip & Thompson, Wyatt, 2015. "Exploring the drivers' side of the “blend wall”: U.S. consumer preferences for ethanol blend fuels," Energy Economics, Elsevier, vol. 49(C), pages 217-226.
    3. Corts, Kenneth S., 2010. "Building out alternative fuel retail infrastructure: Government fleet spillovers in E85," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 219-234, May.
    4. de Freitas, Luciano Charlita & Kaneko, Shinji, 2011. "Ethanol demand in Brazil: Regional approach," Energy Policy, Elsevier, vol. 39(5), pages 2289-2298, May.
    5. Iootty, Mariana & Pinto Jr., Helder & Ebeling, Francisco, 2009. "Automotive fuel consumption in Brazil: Applying static and dynamic systems of demand equations," Energy Policy, Elsevier, vol. 37(12), pages 5326-5333, December.
    6. Sébastien Pouliot & Bruce A. Babcock, 2016. "Compliance Path and Impact of Ethanol Mandates on Retail Fuel Market in the Short Run," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 744-764.
    7. Pouliot, Sébastien, 2013. "Arbitrage between ethanol and gasoline: evidence from motor fuel consumption in Brazil," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150964, Agricultural and Applied Economics Association.
    8. Alberto Salvo & Cristian Huse, 2011. "Is Arbitrage Tying the Price of Ethanol to that of Gasoline? Evidence from the Uptake of Flexible-Fuel Technology," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 119-148.
    9. Pouliot, Sébastien & Babcock, Bruce A., 2014. "The demand for E85: Geographical location and retail capacity constraints," Energy Economics, Elsevier, vol. 45(C), pages 134-143.
    10. Bruce A. Babcock & Sebastien Pouliot, 2013. "Price It and They Will Buy: How E85 Can Break the Blend Wall," Center for Agricultural and Rural Development (CARD) Publications 13-pb11, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    11. Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-1988, November.
    12. Jensen, Kimberly L. & Clark, Christopher D. & English, Burton C. & Menard, R. Jamey & Skahan, Denise K. & Marra, Adrienne C., 2010. "Willingness to pay for E85 from corn, switchgrass, and wood residues," Energy Economics, Elsevier, vol. 32(6), pages 1253-1262, November.
    13. Petrolia, Daniel R. & Bhattacharjee, Sanjoy & Hudson, Darren & Herndon, Cary W., 2010. "Do Americans want ethanol? A comparative contingent-valuation study of willingness to pay for E-10 and E-85," Energy Economics, Elsevier, vol. 32(1), pages 121-128, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luo, Jinjing & Moschini, GianCarlo, 2019. "Pass-through of the policy-induced E85 subsidy: Insights from Hotelling's model," Energy Economics, Elsevier, vol. 84(C).
    2. Gabriel E. Lade, 2019. "E15 Demand and Small Refinery Waivers: A Battle over Long-Run Market Share," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-5, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Tokgoz, Simla & Traoré, Fousseini, 2023. "Understanding E10 markets in the U.S.: Evidence from spatial data," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1267-1281.
    4. GianCarlo Moschini & Harvey Lapan & Hyunseok Kim, 2017. "The Renewable Fuel Standard in Competitive Equilibrium: Market and Welfare Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(5), pages 1117-1142.
    5. Chad Hart & Lee L. Schulz, 2019. "Production Projections and Trade Adjustments," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-2, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    6. Miguel Carriquiry & Amani Elobeid & Dermot J. Hayes & Wendong Zhang, 2019. "Impact of African Swine Fever on US and World Commodity Markets," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-4, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    7. Gabriel E. Lade, 2018. "Testimony Before the U.S. House Committee on Energy and Commerce Subcommittee on Environment," Center for Agricultural and Rural Development (CARD) Publications 18-pb24, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    8. John M. Crespi & Chen-Ti Chen, 2019. "Global Competition Made 2018 a Bad Time to Start a Trade War," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-1, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    9. Chris Jones & Philip W. Gassman & Keith E. Schilling, 2019. "The Urgent Need to Address Nutrient Imbalance Problems in Iowa's High-Density Livestock Regions," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-3, Center for Agricultural and Rural Development (CARD) at Iowa State University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liao, Kenneth & Pouliot, Sébastien, 2016. "Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236107, Agricultural and Applied Economics Association.
    2. Pouliot, Sébastien & Babcock, Bruce A., 2017. "Feasibility of meeting increased biofuel mandates with E85," Energy Policy, Elsevier, vol. 101(C), pages 194-200.
    3. Gabriel E. Lade & James Bushnell, 2019. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(3), pages 563-592.
    4. Gabriel E. Lade & James Bushnell, 2016. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Center for Agricultural and Rural Development (CARD) Publications 16-wp570, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Gabriel E Lade & C -Y Cynthia Lin Lawell & Aaron Smith, 2018. "Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(3), pages 707-731.
    6. Aloisio S. Nascimento Filho & Rafael G. O. dos Santos & João Gabriel A. Calmon & Peterson A. Lobato & Marcelo A. Moret & Thiago B. Murari & Hugo Saba, 2022. "Induction of a Consumption Pattern for Ethanol and Gasoline in Brazil," Sustainability, MDPI, vol. 14(15), pages 1-11, July.
    7. Juliano Assuncao & Joao Paulo Pessoa & Leonardo Rezende, 2013. "Flex Cars and Competition in Ethanol and Gasoline Retail Markets," CEP Discussion Papers dp1251, Centre for Economic Performance, LSE.
    8. Liao, Kenneth & Pouliot, Sebastien, 2015. "Econometric Analysis of Motorists’ Preference for Ethanol in Motor Fuel," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205473, Agricultural and Applied Economics Association.
    9. Pouliot, Sébastien, 2013. "Arbitrage between ethanol and gasoline: evidence from motor fuel consumption in Brazil," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150964, Agricultural and Applied Economics Association.
    10. Andersson, Linda & Ek, Kristina & Kastensson, Åsa & Wårell, Linda, 2020. "Transition towards sustainable transportation – What determines fuel choice?," Transport Policy, Elsevier, vol. 90(C), pages 31-38.
    11. Thiago B. Murari & Aloisio S. Nascimento Filho & Eder J.A.L. Pereira & Paulo Ferreira & Sergio Pitombo & Hernane B.B. Pereira & Alex A.B. Santos & Marcelo A. Moret, 2019. "Comparative Analysis between Hydrous Ethanol and Gasoline C Pricing in Brazilian Retail Market," Sustainability, MDPI, vol. 11(17), pages 1-12, August.
    12. Sebastien Pouliot & Bruce A. Babcock, 2014. "Impact of Ethanol Mandates on Fuel Prices when Ethanol and Gasoline are Imperfect Substitutes," Center for Agricultural and Rural Development (CARD) Publications 14-wp551, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    13. Anthony PARIS & Pascal GASTINEAU & Pierre-Alexandre MAHIEU & Benoît CHEZE, 2020. "Citizen involvement in the energy transition: Highlighting the role played by the spatial heterogeneity of preferences in the public acceptance of biofuels," LEO Working Papers / DR LEO 2828, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    14. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
    15. Pessoa, João Paulo & Rezende, Leonardo & Assunção, Juliano, 2019. "Flex cars and competition in fuel retail markets," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 145-184.
    16. Salvo, Alberto & Huse, Cristian, 2013. "Build it, but will they come? Evidence from consumer choice between gasoline and sugarcane ethanol," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 251-279.
    17. Baral, Nabin & Rabotyagov, Sergey, 2017. "How much are wood-based cellulosic biofuels worth in the Pacific Northwest? Ex-ante and ex-post analysis of local people's willingness to pay," Forest Policy and Economics, Elsevier, vol. 83(C), pages 99-106.
    18. Christina Korting & Harry de Gorter & David R Just, 2019. "Who Will Pay for Increasing Biofuel Mandates? Incidence of the Renewable Fuel Standard Given a Binding Blend Wall," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(2), pages 492-506.
    19. Winden, Matthew & Cruze, Nathan & Haab, Tim & Bakshi, Bhavik, 2015. "Monetized value of the environmental, health and resource externalities of soy biodiesel," Energy Economics, Elsevier, vol. 47(C), pages 18-24.
    20. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2017. "Public's willingness to pay a premium for bioethanol in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 101(C), pages 20-27.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ias:cpaper:16-wp562. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/caiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.