| Registro completo |
| Provedor de dados: |
AgEcon
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| País: |
United States
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| Título: |
Entry of Alternative Fuels in a Volatile U.S. Gasoline Market
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| Autores: |
Vedenov, Dmitry V.
Duffield, James A.
Wetzstein, Michael E.
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| Data: |
2005-05-09
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| Ano: |
2005
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| Palavras-chave: |
Resource /Energy Economics and Policy
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| Resumo: |
The hypothesis underlying this analysis is that in the presence of volatile gasoline prices competitive market forces will yield alternative, less volatile fuels as substitutes. A real-option pricing approach was employed for this analysis by modeling investment under uncertainty for the case of comparing stochastic prices of substitute commodities. Based on real options, threshold decision rules were developed for the adoption of portfolio fuels such as ethanol and conventional gasoline blends. Considering this portfolio effect, the benefit-to-cost ratios are above four for the alternative blends under varying discount rates and time horizons. This provides a strong indication that consumer demand exists for these portfolio fuels. Competitive markets will then respond to this consumer demand yielding less volatile portfolio fuels and incorporating ethanol into domestic fuel mix.
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| Tipo: |
Conference Paper or Presentation
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| Idioma: |
Inglês
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| Identificador: |
16097
http://purl.umn.edu/19182
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| Editor: |
AgEcon Search
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| Relação: |
American Agricultural Economics Association>2005 Annual meeting, July 24-27, Providence, RI
Selected Paper 134421
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| Formato: |
22
application/pdf
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