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Is there a causal relation between ethanol innovation and the market characteristics of fuels in Brazil?

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  • de Freitas, Luciano Charlita
  • Kaneko, Shinji

Abstract

This study examines whether a causal relation exists between ethanol related innovation and fuel market variables in Brazil. Patent counts were used as proxy for innovation and assessed market variables include ethanol consumption and price, and gasoline price. The study refers to the period 1975–2008. Empirical evidence is formulated with an Autoregressive Distributed Lag (ARDL) model for cointegration and the causality is examined with a multivariate Granger causality test. The results demonstrate a potential causal relation between ethanol innovation and ethanol consumption, evidencing a unidirectional relation from ethanol consumption to patent registers in the studied period. Such a relation indicates that increments in ethanol consumption can potentially stimulate innovation in the sector. Moreover, the ethanol price and the cross-effect of gasoline price have an indirect effect on ethanol innovation. Several questions are raised regarding the yet to be determined factors driving innovation in the sector. Further studies focused on nonmarket aspects, including policy factors, subsidies and international technology spillovers, would potentially elucidate several unanswered questions concerning ethanol innovation in Brazil.

Suggested Citation

  • de Freitas, Luciano Charlita & Kaneko, Shinji, 2012. "Is there a causal relation between ethanol innovation and the market characteristics of fuels in Brazil?," Ecological Economics, Elsevier, vol. 74(C), pages 161-168.
    • Handle: RePEc:eee:ecolec:v:74:y:2012:i:c:p:161-168
    DOI: 10.1016/j.ecolecon.2011.12.013
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    3. Jang, Heesun & Du, Xiaodong, 2013. "Trajectory of Maturity: An Empirical Analysis of US Biofuel Innovations," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150132, Agricultural and Applied Economics Association.
    4. Palage, Kristoffer & Lundmark, Robert & Söderholm, Patrik, 2019. "The impact of pilot and demonstration plants on innovation: The case of advanced biofuel patenting in the European Union," International Journal of Production Economics, Elsevier, vol. 210(C), pages 42-55.
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    6. Sant'Anna, Ana Claudia & Shanoyan, Aleksan & Bergtold, Jason Scott & Caldas, Marcellus M. & Granco, Gabriel, 2016. "Ethanol and sugarcane expansion in Brazil: what is fueling the ethanol industry?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), September.
    7. Oliveira, Sydnei Marssal de & Ribeiro, Celma de Oliveira & Cicogna, Maria Paula Vieira, 2018. "Uncertainty effects on production mix and on hedging decisions: The case of Brazilian ethanol and sugar," Energy Economics, Elsevier, vol. 70(C), pages 516-524.
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    9. Castañeda-Ayarza, Juan Arturo & Godoi, Beatriz Araújo, 2021. "Macro-environmental influence on the development of Brazilian fuel ethanol between 1975 and 2019," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
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    11. Yongli Zhang & Sanggyun Na & Jianguang Niu & Beichen Jiang, 2018. "The Influencing Factors, Regional Difference and Temporal Variation of Industrial Technology Innovation: Evidence with the FOA-GRNN Model," Sustainability, MDPI, vol. 10(1), pages 1-19, January.

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