Skip to main content
SpringerLink
Log in

Modeling Ethanol Investment Decisions

  • Conference paper
  • First Online:
Modeling, Dynamics, Optimization and Bioeconomics I

Part of the book series: Springer Proceedings in Mathematics & Statistics ((PROMS,volume 73))

  • 1205 Accesses

Abstract

This article reviews some of the papers my co-authors and I have written analyzing what factors affect the decision to invest in building new ethanol plants using a dynamic structural econometric model of the investment timing game. The results of our research will help determine which policies and factors can promote fuel-ethanol industry development. In Lin and Thome (Investment in corn-ethanol plants in the Midwestern United States: an analysis using reduced-form and structural models, Working paper, University of California at Davis, 2013), we estimate a model of the investment timing game in corn ethanol plants in the United States. This model follows my previous work estimating a structural econometric model of the multi-stage dynamic investment timing game in offshore petroleum production (Lin, 2013). In Lin and Yi (Ethanol plant investment in Canada: a structural model, Working paper, University of California at Davis, 2013; What factors affect the decision to invest in a fuel ethanol plant? a structural model of the ethanol investment timing game, Working paper, University of California at Davis, 2013), we estimate a model of the investment timing game in ethanol plants worldwide that allows for the choice among different feedstocks.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  1. Aguirregabiria, V., Mira, P.: Dynamic discrete choice structural models: a survey. J. Econ. 156(1), 38–67 (2010)

    Article  MathSciNet  Google Scholar 

  2. Bajari, P., Benkard, C.L., Levin, J.: Estimating dynamic models of imperfect competition. Econometrica 75(5), 1331–1370 (2007)

    Article  MATH  MathSciNet  Google Scholar 

  3. Dixit, A.K., Pindyck, R.S.: Investment under Uncertainty. Princeton: Princeton University Press, Princeton (1994)

    Google Scholar 

  4. DOE [Department of Energy]: Energy timelines: ethanol (2008). Revised June 2008. Accessed Jan 2009. http://www.eia.gov/kids/energy.cfm?page=tl_ethanol

  5. Ellison, G., Glaeser, E.L.: The geographic concentration of industry: does natural advantage explain agglomeration? Am. Econ. Rev. 89(2), 311–316 (1999)

    Article  Google Scholar 

  6. FTC [Federal Trade Commission]: Report on Ethanol Market Concentration (2008)

    Google Scholar 

  7. Goetz, S.: State- and county-level determinants of food manufacturing establishment growth: 1987–1993. Am. J. Agr. Econ. 79, 838–850 (1997)

    Article  Google Scholar 

  8. Haddad, M.A., Taylor, G., Owusu, F.: Locational choices in of the ethanol industry in the Midwest corn best. Econ. Dev. Q. 24(1), 74–86 (2010)

    Article  Google Scholar 

  9. Lambert, D.M., Wilcox, M., English, A., Stewart, L.: Ethanol plant location determinants and county comparative advantage. J. Agr. Appl. Econ. 40, 117–135 (2008)

    Google Scholar 

  10. Lin, C.-Y.C.: Strategic decision-making with information and extraction externalities: a structural model of the multi-stage investment timing game in offshore petroleum production. Rev. Econ. Stat. 95(5), 1601–1621 (2013)

    Article  Google Scholar 

  11. Lin, C.-Y.C., Thome, K.: Investment in corn-ethanol plants in the Midwestern United States: an analysis using reduced-form and structural models. Working paper, University of California at Davis (2013)

    Google Scholar 

  12. Lin, C.-Y.C., Yi, F.: Ethanol plant investment in Canada: a structural model. Working paper. University of California at Davis (2013)

    Google Scholar 

  13. Lin, C.-Y.C., Yi, F.: What factors affect the decision to invest in a fuel ethanol plant? a structural model of the ethanol investment timing game. Working paper, University of California at Davis (2013)

    Google Scholar 

  14. Mitchell, D.: A note on rising food prices. Policy research. Working Paper no. 4862, The World Bank Development Prospects Group (July 2008)

    Google Scholar 

  15. Pakes, A., Ostrovsky, M., Berry, S.: Simple estimators for the parameters of discrete dynamic games (with entry and exit examples). RAND J. Econ. 38(2), 373 (2007)

    Article  Google Scholar 

  16. Peter C.R., Wolak, F.A.: Structural econometric modeling: rationales and examples from industrial organization. In: Heckman, J.J., Leamer, E.E. (eds.) Handbook of Econometrics, vol. 6A, pp. 4277–4415. Elsevier, Amsterdam (2007)

    Google Scholar 

  17. Sarmiento, C., Wilson, W.W.: Spatial competition and ethanol plant location decisions. In: Annual Meeting of the American Agricultural Economics Association, Orlando, 27–29 July 2008 (2007)

    Google Scholar 

  18. Urbanchuk, J.M.: Economic Impacts on the Farm Community of Cooperative Ownership of Ethanol Production. National Corn Growers Association Report (2006)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of California at Davis, Davis, CA, USA

    C.-Y. Cynthia Lin

Authors
  1. C.-Y. Cynthia Lin
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to C.-Y. Cynthia Lin .

Editor information

Editors and Affiliations

  1. University of Porto, Department of Mathematics, Porto, Portugal

    Alberto Adrego Pinto

  2. Univ. of California, Dept. of Agricultural and Resource Economics, Berkeley, California, USA

    David Zilberman

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer International Publishing Switzerland

About this paper

Cite this paper

Lin, CY.C. (2014). Modeling Ethanol Investment Decisions. In: Pinto, A., Zilberman, D. (eds) Modeling, Dynamics, Optimization and Bioeconomics I. Springer Proceedings in Mathematics & Statistics, vol 73. Springer, Cham. https://doi.org/10.1007/978-3-319-04849-9_28

Download citation

Publish with us

Policies and ethics

Search

Navigation