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Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices

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  • Liao, Kenneth
  • Pouliot, Sébastien

Abstract

This paper estimates the relative preferences of motorists for E10 and E85 from an intercept survey of motorists with flex-fuel vehicles at E85 fuel stations in Arkansas, California, Colorado, Iowa, and Oklahoma. The information collected includes prices observed at fuel stations, fuel choices by flex motorists, and responses to a series of opinion questions about ethanol and gasoline. We also proposed a hypothetical scenario to each motorist in which either the price of the fuel selected was increased or the price of the fuel not selected was decreased. We first estimate fuel preferences using the revealed preference data from the observed choices. We then use the stated preference data from the hypothetical price scenario to estimate preferences in empirical models that correct for endogeneity from unobservable demand shifters that carry over to the stated preference empirical model. We find that motorists significantly discount E85 compared to E10 even when accounting for the different energy content of the two fuels and that the distribution of willingness to pay for E85 does not vary significantly between regions, except for California where motorists are willing to pay significantly more for E85.

Suggested Citation

  • Liao, Kenneth & Pouliot, Sébastien, 2016. "Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236107, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:236107
    DOI: 10.22004/ag.econ.236107
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    References listed on IDEAS

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    Cited by:

    1. Zhong, Jia & Khanna, Madhu & Chen, Xiaoguang, 2017. "Going Beyond the Blend Wall: Policy Incentives for Fuel Consumers to Supplement the Renewable Fuel Standard," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258483, Agricultural and Applied Economics Association.

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