Do Americans Want Ethanol? A Comparative Contingent-Valuation Study of Willingness to Pay for E-10 and E-85

8 Pages Posted: 20 Jul 2011

See all articles by Daniel R. Petrolia

Daniel R. Petrolia

Mississippi State University - Department of Agricultural Economics

Sanjoy Bhattacharjee

affiliation not provided to SSRN

Darren Hudson

Mississippi State University - Department of Agricultural Economics

Bill Herndon

North Mississippi Research and Extension Center

Date Written: March 17, 2008

Abstract

A nationwide contingent-valuation survey of consumer preferences for consumer fuel blends E-10 (a blend of 10% ethanol and 90% gasoline for use in standard vehicles) and E-85 (a blend of 85% ethanol and 15% gasoline for use in flex-fuel vehicles) was conducted to estimate willingness to pay (WTP) and identify key characteristics driving demand. Results indicate that overall perceptions of ethanol are positive, but ethanol is not the globally-preferred transportation-energy alternative, even among consumers with a positive WTP. Results indicate also that demand for E-85 is more price inelastic than E-10, with this result driven by consumers with no preference for E-10 but strong preferences for E-85. Finally, results also indicate that those consumers who are unsure about the micro-level benefits of E-85 are nonetheless more inclined to pay a premium.

Keywords: E-10, E-85, Ethanol demand, Probit with selection, Willingness to pay

JEL Classification: D12, Q41, Q51

Suggested Citation

Petrolia, Daniel R. and Bhattacharjee, Sanjoy and Hudson, Darren and Herndon, Cary W., Do Americans Want Ethanol? A Comparative Contingent-Valuation Study of Willingness to Pay for E-10 and E-85 (March 17, 2008). Energy Economics, Vol. 32, No. 1, 2010, Available at SSRN: https://ssrn.com/abstract=1889263

Daniel R. Petrolia (Contact Author)

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Sanjoy Bhattacharjee

affiliation not provided to SSRN

No Address Available

Darren Hudson

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States
(662) 325-7998 (Phone)
(662) 325-6614 (Fax)

HOME PAGE: http://www.agecon.msstate.edu/hudson/

Cary W. Herndon

North Mississippi Research and Extension Center ( email )

Mississippi State, MS 39762
United States

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