An Analysis of Ethanol Investment Decisions in Thailand

Abstract

This paper analyzes the decision to invest in building ethanol plants in Thailand. We analyze the effects of economic factors, strategic factors, and government policies on ethanol investment using discrete response and fixed effects regression models. Results show that the main factor that affects the decision to invest in building an ethanol plant in a particular changwat is the number of ethanol plants already in the changwat. The number of ethanol plants already in the changwat has a significant negative effect on the decision to invest in building an ethanol plant in a particular changwat, which suggests that potential investors are deterred by local competition in input and output markets.