Ethanol Trade between Brazil and the United States

Stephen Devadoss and Martin Kuffel

No 60889, 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado from Agricultural and Applied Economics Association

Abstract: The United States has used tax credit and mandate to promote ethanol production. To offset the tax credit availed by the imported ethanol, the United States instituted an import tariff. This study ascertains the appropriate U.S. ethanol import tariff corresponding to the U.S. domestic policies by setting the policy-induced ethanol price equal to the free market price. The theoretical results from a horizontally-related ethanol-gasoline partial equilibrium model of three countries (the United States, Brazil, and the Rest of the World) show that the United States should provide an import subsidy rather than impose a tariff. The empirical results quantify that this import subsidy is $0.10, instead of a $0.57 import tariff, per gallon of ethanol.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 28
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea10:60889

DOI: 10.22004/ag.econ.60889

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