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The asymmetric pattern of fuel demand in Brazil

Author

Listed:
  • Carlos Frederico A. Uchoa

    (Federal University of Bahia)

  • Cleiton S. de Jesus

    (State University of Feira de Santana)

  • Leonardo C. B. Cardoso

    (Federal University of Viçosa)

Abstract

In Brazil, since most of the fleet consists of flexible-fuel vehicles, the ethanol-to-gasoline price ratio affect demand. In this study, we address the asymmetric behavior of demand estimating a dynamic panel with threshold effect. Based on municipal data from 2007 to 2017, we estimate a threshold close to 71% for ethanol and 66% for gasoline. The estimated elasticities differ from one regime to another, depending on the ethanol-to-gasoline price ratio. Our findings therefore contribute to an understanding of how price ratio affects the demand for both fuels, supporting the design of public policies aimed at a transition to biofuels.

Suggested Citation

  • Carlos Frederico A. Uchoa & Cleiton S. de Jesus & Leonardo C. B. Cardoso, 2021. "The asymmetric pattern of fuel demand in Brazil," Economics Bulletin, AccessEcon, vol. 41(1), pages 155-160.
    • Handle: RePEc:ebl:ecbull:eb-20-00490
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    References listed on IDEAS

    as
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    Cited by:

    1. Wang, Junke & Jiang, Yilin & Tang, Choon Yik & Song, Li, 2022. "Development and validation of a second-order thermal network model for residential buildings," Applied Energy, Elsevier, vol. 306(PB).

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    More about this item

    Keywords

    Elasticity; Ethanol and gasoline; Dynamic panel data; Threshold; Nonlinearity.;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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