Response to “Ethanol Production and Gasoline Prices: A Spurious Correlation” by Knittel and Smith
نویسندگان
چکیده
Introduction In a recent working paper, Christopher Knittel and Aaron Smith attack our paper on “The impact of ethanol production on US and regional gasoline markets relating ethanol production to gasoline prices" as published in 2009 in Energy Policy. Our work found that as ethanol production increased, the price of gasoline fell relative to the price of crude oil. Knittel and Smith (K and S) claim to have refuted this result and conclude that their “Empirical models that are most consistent with economic theory suggest effects that are near zero and statistically insignificant”.
منابع مشابه
Applied Economics Workshop
We investigate how gasoline prices affect automobile purchases. We find that the adjustment of equilibrium market shares and prices in response to changes in usage cost varies dramatically between new and used markets. In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. The effects are largest for the mostand ...
متن کاملPain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets∗
We investigate how gasoline prices affect automobile purchases. We find that the adjustment of equilibrium market shares and prices in response to changes in usage cost varies dramatically between new and used markets. In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. The effects are largest for the mostand ...
متن کاملThe Higher Price of Cleaner Fuels: Market Power in the Rail Transport of Fuel Ethanol
This paper provides evidence of market power in the transportation of ethanol used in reformulated gasoline and alternative transportation fuels. I estimate a reduced form model for railroad route-level prices. My identification strategy instruments for railroad entry, controls for selection and explicitly models capacity constraints. A detailed understanding of this industry is important becau...
متن کاملWho is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships∗
Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate ...
متن کاملThe Impact of Ethanol Production on U.S. and Regional Gasoline Prices and on the Profitability of the U.S. Oil Refinery Industry
Using pooled regional time-series data and panel data estimation, we quantify the impact of monthly ethanol production on monthly retail regular gasoline prices. This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gas...
متن کامل