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Estimating the Welfare Effects of U.S. Distortions in the Ethanol Market Using a Partial Equilibrium Trade Model

  • Martinez-Gonzalez Ariadna

    (The Ohio State University)

  • Sheldon Ian M

    (The Ohio State University)

  • Thompson Stanley

    (The Ohio State University)

In this paper the impact of distortions on U.S. imports of ethanol from Brazil are calculated. This is achieved by using two-stage least squares to estimate a partial equilibrium trade model based on annual data from 1975 to 2006. From this the derived export supply and import demand elasticities are used to derive "back-of-the-envelope" measures of the static and cumulative deadweight losses, assuming the distortions are not eliminated. The results presented support the hypothesis that the U.S. and Brazil would reap gains from trade if distortions in the U.S. ethanol market were eliminated.

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Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 5 (2007)
Issue (Month): 2 (December)
Pages: 1-19

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Handle: RePEc:bpj:bjafio:v:5:y:2007:i:2:n:5
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