eduzhai > Applied Sciences > Transportation >

The Higher Price of Cleaner Fuels: Market Power in the Rail Transport of Fuel Ethanol

  • Save

... pages left unread,continue reading

Document pages: 40 pages

Abstract: 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.

Please select stars to rate!


0 comments Sign in to leave a comment.

    Data loading, please wait...