Biodioesel in Brazil: market structure determined by auction policy

Abstract

This paper used the indexes of Gini, Theil and Partial Concentration in order to analyze the market concentration of firms that participated in sixteen auctions of the National Petroleum Agency. The empirical analysis of the results indicated that the biodiesel market in Brazil was initially more concentrated, both by the smaller quantities of companies qualified as by their ability to compete in an initial period of production. However, from the 4th auction, the number of participating companies with capacity to produce and participate in the auctions has increased and, consequently, it caused the level of concentration decreased, according to the CR4 index. However, the Gini and Theil indexes indicated an increase in concentration from the first auction in April, although still at a moderate level.