Abstract
This work estimated the effect of price control of gasoline A on the hydrated ethanol and gasoline C in Brazilian fuel markets. For that, the prices that would prevail without intervention were evaluated. The results show that the Brazilian government intervention in the gasoline price stimulated the production of hydrated ethanol by keeping its price 9% higher than estimated, on average, along the period of 2006 to 2010. Through the 2011 to 2014 period, the government intervention reduced gasoline price, what had a negative effect on the hydrous ethanol price (7% lower than estimated) and its production, as well as the financial health of the state firm that supplies gasoline A. In 2015, the government restricted the transmission of reductions in the international price of gasoline to the domestic market, keeping the domestic price 7% higher than expected, and harming the competitiveness of the Brazilian economic sectors for which fossil fuel is a relevant item in the production cost.
Keywords
Prices; Government intervention; Biofuel; Gasoline; Ethanol; Brazil
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