Document Type

Working Paper

Publication Date

10-1-2015

Working Paper Number

WP# 13015, October 2015

Abstract

We develop a long-run cellulosic biofuel cost model that minimizes feedstock procurement and processing costs per gallon. The distinguishing feature of the model is that it accounts for the procurement tradeoff between the intensive margin (biomass producers' participation rate) and extensive margin (biomass capture region). To investigate the extent to which this procurement trade-off affects processors' cost-minimizing decisions, we apply the model to switchgrass ethanol production in U.S. crop reporting districts. Results suggest that location characteristics will determine the extent to which processors can reduce their total procurement costs by offering a higher biomass price to increase participation near the plant and reduce transportation costs.

JEL Classification

Q11, Q16, Q41, Q42

File Format

application/pdf

Length

31 pages

Included in

Economics Commons

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