How Policies Affect International Biofuel Price Linkages

30 Pages Posted: 17 Oct 2011

See all articles by Miroslava Rajcaniova

Miroslava Rajcaniova

Slovak University of Agriculture

Dusan Drabik

Cornell University - Charles H. Dyson School of Applied Economics and Management

Pavel Ciaian

European Union - Institute for Prospective Technological Studies (IPTS)

Date Written: October 16, 2011

Abstract

We estimate the role of biofuel policies in determining which country is the biofuel price leader in world markets using a cointegration analysis and the Vector Error Correction (VEC) model. Weekly prices are analyzed for the EU, U.S, and Brazilian ethanol and biodiesel markets for the 2002-2010 and 2005-2010 time periods, respectively. The U.S. blender’s tax credit and consumer tax exemption in Brazil appear to play a role in determining the ethanol prices in other countries. For biodiesel, our results demonstrate that the EU policies – consumer tax exemption and blend target – tend to form the world biodiesel price.

Keywords: biofuels, biofuel polices, mandate, tax credit, tax exemption, price leadership, VEC

JEL Classification: C32, Q16, Q17, Q47

Suggested Citation

Rajcaniova, Miroslava and Drabik, Dusan and Ciaian, Pavel, How Policies Affect International Biofuel Price Linkages (October 16, 2011). Available at SSRN: https://ssrn.com/abstract=1945022 or http://dx.doi.org/10.2139/ssrn.1945022

Miroslava Rajcaniova (Contact Author)

Slovak University of Agriculture ( email )

Faculty of Economics and Management
Tr. Andreja Hlinku 2
Nitra, 949 76
Slovakia

Dusan Drabik

Cornell University - Charles H. Dyson School of Applied Economics and Management ( email )

331 Warren Hall
Ithaca, NY 14853
United States

HOME PAGE: http://https://sites.google.com/site/dusandrabik83/Home

Pavel Ciaian

European Union - Institute for Prospective Technological Studies (IPTS) ( email )

Edificio Expo, C
Inca Garcilaso, s/n
Sevilla, E-41092
Spain

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