Locational Choices of the Ethanol Industry in the Midwest Corn Belt
The Corn Belt has experienced a rapid expansion of corn-based ethanol plants. This has provided researchers the opportunity to examine the relative importance to the renewable fuels industry of several location factors previously identified as important to agro-industries. Using probit regressions, this study identifies the factors significant to ethanol firmsâ€™ location decisions in the four-state study area of Iowa, Illinois, Minnesota, and Nebraska. In Iowa and Illinois, where corn is largely ubiquitous, firms move beyond corn supply to consider other localized factors in their decision-making process. Factors such as rail access, population density, and proximity to blending terminals emerge as significant considerations. Probit regressions comparing states reveal the competitive advantages that each offers to ethanol firms. The importance of the findings to economic development professionals is discussed and areas for future research are suggested.
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