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Supply and demand elasticities in the U.S. ethanol fuel market

  • Luchansky, Matthew S.
  • Monks, James

The market for ethanol has grown from approximately 1.2billion gallons in 1997 to almost 5billion gallons in 2006. With the huge increase in ethanol demand in recent years, the growth in derived demand for corn has driven up many food prices. This paper uses monthly data from 1997-2006 to estimate the market supply and demand for ethanol at the national level. The simultaneous determination of the supply and demand curves using two-stage least squares allows for the calculation of supply and demand-side elasticities, which are important results in light of the tremendous growth in this market and recent legislation concerning ethanol.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 31 (2009)
Issue (Month): 3 (May)
Pages: 403-410

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Handle: RePEc:eee:eneeco:v:31:y:2009:i:3:p:403-410
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  1. Hyunok Lee & Joseph W. Glauber & Daniel A. Sumner, 1994. "Increased Industrial Uses Of Agricultural Commodities Policy, Trade And Ethanol," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 22-32, 07.
  2. Rask, Kevin N., 1998. "Clean air and renewable fuels: the market for fuel ethanol in the US from 1984 to 1993," Energy Economics, Elsevier, vol. 20(3), pages 325-345, June.
  3. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some Long-Run Effects of Growing Markets and Renewable Fuel Standards on Additives Markets and the U.S. Ethanol Industry," Staff General Research Papers 10648, Iowa State University, Department of Economics.
  4. anonymous, 2007. "Bank dedicates cornerstone," TEN, Federal Reserve Bank of Kansas City, issue Win, pages 26-27.
  5. Baker, Allen & Zahniser, Steven, 2007. "Ethanol Reshapes the Corn Market," Amber Waves, United States Department of Agriculture, Economic Research Service, May.
  6. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some long-run effects of growing markets and renewable fuel standards on additives markets and the US ethanol industry," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 585-608, September.
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