Abstract
Improved environmental management facilities provide social benefits to economic agents in Ghana. Biogas technology facility is one solution that offers societal gains. However, the maximization of social benefit in some cases depends on the structure of the market. The objective of this study was to examine loss in consumer surplus and gain in producer surplus, and if there was, deadweight loss relating to regulated biogas market structure in Ghana. The simple market models were fundamental tools in the economic surplus method used for the study. The results of the study showed that regulated monopoly although productive reduces societal gains and so inefficient compared with the free market. The regulated monopolist‖ producer gain was 13%, but there was 37% and 41% loss to consumers and investors‖ NPV respectively. There was also a deadweight loss of US$18,140.00. Market forces allow consumers to be future regulators of previously government regulated 2nd and 3rd degree discriminating monopoly. It is possible to avoid Market forces regulation in biogas diffusion when participants are reluctant to hike price.
Highlights
This study focuses on relative decreases or increases in Consumer Surplus (CS), Producer Surplus (PS), social surplus and Net Present Value (NPV) in the two biogas markets
The high benefits (Consumer Surplus, Producer Surplus and social surplus) in free biogas market recorded in this study directly collates with the profitability of family sized digesters in Uganda by (Walekhwa 2010)
Loss in PS, NPV and deadweight loss all under regulated monopoly market structure as compared with ―free‖ market is an indication that regulated markets subtract from societal gains
Summary
A simple well-known biogas technology called anaerobic digestion produces gaseous fuel from biogas plant (Abbasi, et al, 2012). Anaerobic digestion is a biochemical conversion, for energy production - whereby organic matter is transformed into energy by the action of microorganisms. This conversion process involves the breakdown of complex organic materials into simple compounds that can be absorbed and used as nutrients, usually by the microorganisms. The microorganisms eventually use the nutrients to produce combustible biogas comprising mainly of CH4 (50 – 70%), CO2 (30 – 45 %), and nutrient-rich sludge (Wagner, et al.,2009; Herrmann, et al, 2016)
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