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A Welfare Analysis of the U.S. Ethanol Subsidy

Author

Listed:
  • Xiaodong Du
  • Dermot J. Hayes
  • Mindy L. Mallory

Abstract

Based on an analytical model of multiple interconnected markets including corn, ethanol, gasoline, and transportation fuel, this study estimates the welfare changes for consumers and producers resulting from ethanol production and related support polices in 2007. The welfare estimation takes into account the fact that the ethanol program was implemented in a market that had already been distorted by other programs. The results suggest a total social cost of about $0.89 billion for given market parameters. We validate the model's underlying assumption and test for the results' sensitivity to assumed parameters. Copyright 2009 Agricultural and Applied Economics Association

Suggested Citation

  • Xiaodong Du & Dermot J. Hayes & Mindy L. Mallory, 2009. "A Welfare Analysis of the U.S. Ethanol Subsidy," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(4), pages 669-676, December.
    • Handle: RePEc:oup:revage:v:31:y:2009:i:4:p:669-676
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    Cited by:

    1. Bullock David S. & Couleau Anabelle, 2014. "Policy Analysis in Welfare and Policy Spaces: Applications to the Labyrinthine U.S. Ethanol Policy Literature," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 35-51, January.
    2. Thompson, Wyatt & Whistance, Jarrett & Meyer, Seth, 2011. "Effects of US biofuel policies on US and world petroleum product markets with consequences for greenhouse gas emissions," Energy Policy, Elsevier, vol. 39(9), pages 5509-5518, September.
    3. Lee, Yunkyung, 2020. "Potential economic consequences of gene-edited technology on the U.S. soybean market," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304241, Agricultural and Applied Economics Association.
    4. Bullock, David S., 2012. "Dangers of Using Political Preference Functions in Political Economy Analysis: Examples from U.S. Ethanol Policy," 2012 First Congress, June 4-5, 2012, Trento, Italy 124118, Italian Association of Agricultural and Applied Economics (AIEAA).
    5. Basak Bayramoglu & Jean-François Jacques, 2016. "The economic and environmental effects of a biofuel mandate policy: the case of France [Les effets économiques et environnementaux d’une politique d’incorporation obligatoire de biocarburants : le ," Post-Print hal-02877013, HAL.
    6. Dong Hee Suh & Charles B. Moss, 2017. "Dynamic adjustment of ethanol demand to crude oil prices: implications for mandated ethanol usage," Empirical Economics, Springer, vol. 52(4), pages 1587-1607, June.
    7. Fahad Saeed & Mansour Almazroui & Nazrul Islam & Mariam Saleh Khan, 2017. "Intensification of future heat waves in Pakistan: a study using CORDEX regional climate models ensemble," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 87(3), pages 1635-1647, July.

    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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