Spatial Competition and Economics of Biofuels from Corn Stover

Juan Sesmero (), Joseph Balagtas () and Michelle Pratt

No 170595, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: This paper develops a model of spatial competition nesting the classical Zhang and Sexton (2001) duopsony and spatial monopsony in order to evaluate the effects of alternative stover market structures on stover prices, supply of biofuels, and firm profits. We show theoretically, as well as in an empirical implementation calibrated to reflect supply conditions in Indiana, that spatial competition may significantly increase feedstock cost, reduce profits of biofuels plants, and decrease a plant’s optimal scale of production and supply elasticity.

Keywords: Industrial Organization; Production Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 41
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-com and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170595

DOI: 10.22004/ag.econ.170595

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