The effect of ethanol policies on the vertical price transmission in corn and food markets

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F49777513%3A23510%2F16%3A43928483" target="_blank" >RIV/49777513:23510/16:43928483 - isvavai.cz</a>
Result on the web
<a href="http://www.sciencedirect.com/science/article/pii/S014098831630024X" target="_blank" >http://www.sciencedirect.com/science/article/pii/S014098831630024X</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1016/j.eneco.2016.02.010" target="_blank" >10.1016/j.eneco.2016.02.010</a>

Result language
angličtina
Original language name
The effect of ethanol policies on the vertical price transmission in corn and food markets
Original language description
This paper analyzes the impact of ethanol policies on price transmission along the food supply chain. We consider the US corn sector and its vertical links with food and ethanol (energy) markets. We find that ethanol is a source of imperfect price transmission in the food supply chain. Ethanol, however, alters price transmission only under a binding blender's tax credit and only from food to corn (not vice versa). Our results indicate that ethanol weakens the response of corn and food prices in terms of their level changes to shocks occurring in agricultural (corn and food) markets. The results are robust to different assumptions on the model parameters. Although market power has previously been identified as a source of imperfect price transmission in the food supply chain, our findings show that in the presence of ethanol, the imperfect price transmission may occur even if markets are perfectly competitive. This warrants careful evaluation of markets before any policy intervention.
Czech name
—
Czech description
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Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
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Project
<a href="/en/project/GA16-02760S" target="_blank" >GA16-02760S: Productivity of Farms, Demand for Food, and Food Security in Central and Eastern European Countries</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2016
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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