Abstract
Competition is a relevant element in any open economy. Public policies are necessary to induce economic efficiency and to create conditions to preserve or stimulate a competitive environment. This paper aims to assess the competitiveness of hydrous ethanol price in a period of political, social and economic crises, in 15 Brazilian state capitals between the years 2012 and 2019. We compared the ethanol–gasoline price ratio behavior in two different periods, before and after the import parity price policy implemented by Petrobras in 2016. Mann–Whitney and Levene’s tests, two non-parametric statistical methods, were applied to verify significant changes between these periods. The implementation of changes in Petrobras’ pricing policy from 2016 onwards caused a statistically significant increase in the ratio coefficient of variation in two-thirds of the distribution market and more than the half of analyzed retail markets. Second, overall, the cities that showed statistically significant changes in the median and coefficient of variation in the distribution market price ratio were followed by the retail market. Our findings suggest that government interventions in the fuel and byproduct final selling prices to distributors negatively impact competition between companies that are part of the fuel distribution and retail chain, also affecting the sale of biofuels in Brazil and discouraging the initiatives to use renewable fuels to reduce the emission of pollutants.
Highlights
The ratio is an important metric for the analysis of the market dynamic because hydrous ethanol is considered economically viable for flex-fuel vehicles when the ethanol–gasoline price ratio is below 0.7 [19,34,40] and this information is highly publicized by the Brazilian media
In this paper we verified the competitiveness of the Brazilian hydrous ethanol market after the implementation of Petrobras’ Import parity price (IPP) policy during a period of political, social and economic turbulence in the country, from 2012 to 2019
The ethanol–gasoline price ratios were used to compare the behavior of the fuel market throughout this period
Summary
Brazilians lived through a period of political and economic stop-and-go from 2010 to. Four covers’ headings from the respected British magazine The Economist summarizes how the Brazilian economic crisis turned into an institutional crisis. 2009 the heading was “Brazil takes off” [1]; Brazil’s economy was growing at an annualized rate of 5%. It should have picked up more speed over the following few years as big new deep-sea oil fields came online, and commodity sales grew. As a prelude to the upcoming crisis, fiscal stimulus policies, spending and tax cuts, and a monetary policy that was more lenient with inflation, continued to stimulate the market through 2014.
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