Relationship between ethanol and gasoline: AIDS approach

Frank Tenkorang, Bree L. Dority, Deborah Bridges and Eddery Lam ()

Energy Economics, 2015, vol. 50, issue C, 63-69

Abstract: Ethanol production in the United States has increased significantly due to government support, which has begun to dwindle. Ethanol now seems to compete with gasoline for vehicle fuel but because ethanol is mostly sold as a blend, gasoline and ethanol could be complementary fuel sources. The study investigates the true relationship between these fuels since it has policy implications. Results of LA/AIDS estimation show the two fuels were substitutes before the rapid expansion of ethanol production but have become complements overtime due to increasing share of ethanol in fuel consumption.

Keywords: Ethanol; LA/AIDS; Gasoline; Price elasticity; Complements; Substitutes (search for similar items in EconPapers)
JEL-codes: Q16 Q41 Q42 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:50:y:2015:i:c:p:63-69

DOI: 10.1016/j.eneco.2015.04.019

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