The asymmetric pattern of fuel demand in Brazil

Carlos Frederico Uchoa (), Cleiton de Jesus () and Leonardo Cardoso ()
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Carlos Frederico Uchoa: Federal University of Bahia
Cleiton de Jesus: State University of Feira de Santana

Economics Bulletin, 2021, vol. 41, issue 1, 155-160

Abstract: In Brazil, since most of the fleet consists of flexible-fuel vehicles, the ethanol-to-gasoline price ratio affect demand. In this study, we address the asymmetric behavior of demand estimating a dynamic panel with threshold effect. Based on municipal data from 2007 to 2017, we estimate a threshold close to 71% for ethanol and 66% for gasoline. The estimated elasticities differ from one regime to another, depending on the ethanol-to-gasoline price ratio. Our findings therefore contribute to an understanding of how price ratio affects the demand for both fuels, supporting the design of public policies aimed at a transition to biofuels.

Keywords: Elasticity; Ethanol and gasoline; Dynamic panel data; Threshold; Nonlinearity. (search for similar items in EconPapers)
JEL-codes: Q3 Q4 (search for similar items in EconPapers)
Date: 2021-03-10
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Citations: View citations in EconPapers (1)

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