Regulation of agribusiness systems of biodiesel production: a comparative analysis

Abstract

This study aims to analyze the effect of regulation on efficiency of agribusiness systems for biodiesel production, given the transaction cost present in induced and spontaneous arrangements. The theoretical approach that bases this study is the New Institutional Economics and Transaction Cost Economics, when the choice between institutional arrangements needs to consider the costs involved in the operation of each possibility. The research strategy is the multiple-case study in Goiás, Bahia, and Sao Paulo states. They have studied soybean, castor bean, sunflower, and jatropha institutional arrangements. From the analysis of the transaction costs present in each arrangement, it was found that the purchase of soybeans in the market would be the spontaneous choice if the regulator agent (government) did not displace the choice of agents to an arrangement considered suboptimal, as is the case of purchase of oleaginous by contracts. Considering that agents are induced to transact at higher-cost arrangements, it was identified the creation of mechanisms to reduce those costs, as the triangulation of raw materials and informal contracts with farmers denominated “fake contracts”. It is concluded that the transaction costs present in the deployment of a new industry make it difficult to achieve the objectives of the public policy.