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The Economics of Spatial Competition for Corn Stover

Author

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  • Sesmero, Juan P.
  • Balagtas, Joseph V.
  • Pratt, Michelle

Abstract

This paper develops an empirical model of spatial competition in order to evaluate the effects of alternative corn stover market structures on stover prices, supply of cellulosic biofuels, and firm profits. We calibrate the model to market conditions in Indiana and show that spatial competition may significantly increase feedstock cost, reduce profits of biofuels plants, and increase the price of biofuel necessary to induce a given production target. On the other hand, spatial competition causes firms to rely more on the intensive margin, increasing farmers’ share of the industry’s surplus.

Suggested Citation

  • Sesmero, Juan P. & Balagtas, Joseph V. & Pratt, Michelle, 2015. "The Economics of Spatial Competition for Corn Stover," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-17, September.
    • Handle: RePEc:ags:jlaare:210549
    DOI: 10.22004/ag.econ.210549
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    References listed on IDEAS

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    Cited by:

    1. Graubner, Marten & Sexton, Richard J., 2021. "Spatial competition in agricultural procurement markets," 2021 Annual Meeting, August 1-3, Austin, Texas 313962, Agricultural and Applied Economics Association.
    2. Li, Chao & Hayes, Dermot J. & Jacobs, Keri L., 2018. "Biomass for bioenergy: Optimal collection mechanisms and pricing when feedstock supply does not equal availability," Energy Economics, Elsevier, vol. 76(C), pages 403-410.

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