Staff Publications

Staff Publications

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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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Record number 498734
Title The effect of ethanol policies on the vertical price transmission in corn and food markets
Author(s) Drabik, D.; Ciaian, P.; Pokrivcak, J.
Source Energy Economics 55 (2016). - ISSN 0140-9883 - p. 189 - 199.
Department(s) Agricultural Economics and Rural Policy Group
Publication type Refereed Article in a scientific journal
Publication year 2016
Keyword(s) price transmission - food supply chain - biofuels - policies - mandate - tax credit - prices
Abstract This paper analyzes the impact of ethanol policies on price transmission along the food supply chain. We consider the US corn sector and its vertical links with food and ethanol (energy) markets. We find that ethanol is a source of imperfect price transmission in the food supply chain. Ethanol, however, alters price transmission only under a binding blender's tax credit and only from food to corn (not vice versa). Our results indicate that ethanol weakens the response of corn and food prices in terms of their level changes to shocks occurring in agricultural (corn and food) markets. The results are robust to different assumptions on the model parameters. Although market power has previously been identified as a source of imperfect price transmission in the food supply chain, our findings show that in the presence of ethanol, the imperfect price transmission may occur even if markets are perfectly competitive. This warrants careful evaluation of markets before any policy intervention.
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