Vol. 75 No. 1 (2020)
Articles

CIDE and elasticity oscillation on the ethanol and gasoline market: Brazilian taxation policy under discussion

Mario Antonio Margarido
Institute of Agricultural Economics - São Paulo, Brazil
Gesmar Rosa dos Santos
Institute for Applied Economic Research - Brasília, Brazil
Carlos Eduardo de Freitas Vian
Luiz de Queiroz College of Agriculture, University of São Paulo - Piracicaba, Brazil
Pery Francisco Assis Shikida
Western Paraná State University (UNIOESTE) - Toledo, Brazil
Bárbara Françoise Cardoso Bauermann
University Centre União Dinâmica das Cataratas (UDC) - Foz do Iguaçu, Brazil
Published June 11, 2020
Keywords
  • Brazilian taxation policy,
  • price elasticity,
  • ethanol,
  • gasoline,
  • consumer’s choice
How to Cite
Margarido, M. A., dos Santos, G. R., de Freitas Vian, C. E., Assis Shikida, P. F., & Cardoso Bauermann, B. F. (2020). CIDE and elasticity oscillation on the ethanol and gasoline market: Brazilian taxation policy under discussion. Italian Review of Agricultural Economics, 75(1), 3-17. https://doi.org/10.13128/rea-11738

Abstract

The aim of this paper is to identify the path of the gasoline price elasticity, ethanol price elasticity, ethanol-gasoline cross-price elasticity and the gasoline-ethanol cross-price elasticity for the flex-fuel vehicle market, as well as to discuss the taxation policies impact of the Economic Domain Intervention Contribution (CIDE) on the ethanol and gasoline markets. Therefore, it was used the Structural Methodology model, as well as official data from 2003 to 2007. The results show great power of influence of the tax on the gasoline’s price and on the costumer’s choice between ethanol or gasoline. Thus, the CIDE is one of the most important reasons for ethanol consume, contributing to an effective reduction in the green house gases and atmospheric pollutants emissions.

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