City Research Online

Abstract

This paper investigates market effects of the Brazilian biodiesel law, which made the use of biodiesel, blended with petroleum diesel, mandatory in Brazil. The study estimates the demand curve for diesel fuel (biodiesel and petroleum diesel) and the industry supply curve of biodiesel. These two pieces of information have been used in a static analysis to draw scenarios with different biodiesel mandates. The results show that the current proportion of biodiesel in the diesel mixture (5%) increases consumers' price by 1.7% and decreases the consumption by 1.5% compared to the scenario without biodiesel. Also, an increase in the biodiesel percentage to 10% would raise the price by 3.5% and reduce the consumption by 3%. © 2012 Elsevier B.V.

Publication Type:	Article
Publisher Keywords:	Biodiesel; Static analysis; Demand estimation
Subjects:	H Social Sciences > HB Economic Theory
Departments:	School of Policy & Global Affairs > Economics
SWORD Depositor:	Symplectic Administrator

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