Agriculture Reference
In-Depth Information
problems of big size they used though a grid search algorithm to overcome
the limits of the NLP by searching over all possible unitary tax exemptions
for
the
two
bio-fuels
concerned.
Prices at
the
plant
gate
have
been
determined by solving the farm linear programming (LP) model.
Tax exemption to biofuels (no budgetary constraints)
BB'B": biofuel marginal cost=biomasse opportunity cost+conversion
cost-coproduct value
OA: biofuel market price (perfectly elastic demand curve)
OC: biofuel value=biofuel market price + tax exemption (AC)
OO´´: quantity produced at the equilibrium level (biofuel value equal to
its marginal cost)
CBB´´: producer (agricultural sector) surplus
CB´´A´´A: total cost to the government of the biofuel support program
ABB´´A´´ = CB´´A´´A - CBB´´: deadweight loss
Tax exemption of biofuels under budgetary constraint
CC´A´A: total budget earmarked to biofuel
OO´: biofuel quantity produced (agreements approved by the government
that depend on earmarked budget)
CA: tax exemption to biofuel (depends on budget)
DBB´: producer (agricultural sector) surplus
DCC´B´: industry surplus
ABB´A´ = CC´A´A - DBB´ - DCC´B´´: deadweight loss
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