The higher price of cleaner fuels: Market power in the rail transport of fuel ethanol

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• 作者：Jonathan E. Hughes  ; ;   ; ^{jonathan.e.hughes@colorado.edu}
• 关键词：Price discrimination ; Biofuels ; Climate change
• 刊名：Journal of Environmental Economics and Management
• 出版年：2011
• 出版时间：September 2011
• 年：2011
• 卷：62
• 期：2
• 页码：123-139
• 全文大小：488 K

文摘

This paper provides evidence of market power in the transportation of ethanol used in reformulated gasoline and alternative transportation fuels. I estimate a reduced form model for railroad route-level prices. My identification strategy instruments for railroad entry, controls for selection and explicitly models capacity constraints. A detailed understanding of this industry is important because U.S. environmental policies seek to substantially expand ethanol use. Evidence of market power may alter the types of policies pursued by lawmakers. I find that ethanol shipment prices are lower for more competitive routes. I also find evidence that railroads price discriminate based on environmental regulation at route destinations. Monopolist prices for shipments to carbon monoxide non-attainment areas are 3 % higher than shipments to other destinations. This price premium falls sharply with increased competition. This suggests a perverse result where environmental regulation increases the price of a clean input.