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Integration in Gasoline and Ethanol Markets in Brazil over Time and Space under the Flex-fuel Technology

Hector Nuñez () and Jesus Otero ()

No 204306, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: We employ a pair-wise approach to analyse regional integration in the gasoline and ethanol markets in Brazil. Using weekly price data for these two fuels at the state level over a period of almost 10 years, we find that more than half of the fuel price differentials are stationary, which reveals the importance of allowing for spatial considerations when testing for market integration. We find that the speed at which prices converge to the long-run equilibrium depends upon the distance between states and the similarity between tax regimes. Other demand and supply factors such as population density, number of gas stations and GDP per capita are not statistically significant.

Keywords: Demand and Price Analysis; Resource /Energy Economics and Policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-lam and nep-tre
Date: 2015
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Journal Article: Integration in Gasoline and Ethanol Markets in Brazil over Time and Space under the Flex-fuel Technology (2017) Downloads
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