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The U.S. Ethanol and Commodity Policy Labyrinth: Looking into Welfare Space to Analyze Policies that Combine Multiple Instruments

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  • Bullock, David S.
  • Couleau, Anabelle

Abstract

We analyze complicated ethanol/commodity policies not just in (q, p) space, but also in “policy space” and “welfare space.” Specific advantages of conducting policy analysis in welfare and policy spaces are (1) it makes clearer the distributional consequences of policy change instead of focusing solely on the aggregate welfare consequences of policy change; (2) it can be used to analyze the effects of many (even infinitely many) policies instead of just a few; and (3) it makes clearer what it means for policies to be more/less “efficient,” and for policy instruments to make each other more/less “efficient.” We show the usefulness of our framework to critique various conclusions that have recently been expressed in the literature on ethanol policies that employ multiple instruments.

Suggested Citation

  • Bullock, David S. & Couleau, Anabelle, 2012. "The U.S. Ethanol and Commodity Policy Labyrinth: Looking into Welfare Space to Analyze Policies that Combine Multiple Instruments," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126901, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae12:126901
    DOI: 10.22004/ag.econ.126901
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    References listed on IDEAS

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    3. de Gorter, Harry & Just, David R. & Tan, Qinwen, 2009. "The Socially Optimal Import Tariff and Tax Credit for Ethanol with Farm Subsidies," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(1), pages 1-13, April.
    4. Lapan, Harvey E. & Moschini, GianCarlo, 2009. "Biofuels policies and welfare: is the stick of mandates better than the carrot of subsidies?," ISU General Staff Papers 200906100700001138, Iowa State University, Department of Economics.
    5. Schmitz Andrew & Moss Charles B. & Schmitz Troy G., 2007. "Ethanol: No Free Lunch," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-28, December.
    6. Bruce Gardner, 1983. "Efficient Redistribution through Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 225-234.
    7. Jean-Marc Bourgeon & David Tréguer, 2010. "Killing two birds with one stone: US and EU biofuel programmes," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 37(3), pages 369-394, September.
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    9. Gardner Bruce, 2007. "Fuel Ethanol Subsidies and Farm Price Support," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-22, December.
    10. Mindy L. Baker, 2008. "Welfare Changes from the U.S. Ethanol Tax Credit: The Role of Uncertainty and Interlinked Commodity Markets," Center for Agricultural and Rural Development (CARD) Publications 08-wp483, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Vorotnikova, Ekaterina & Seale, James L, 2014. "U.S. Ethanol Mandate Is a Hidden Subsidy to Corn Producers," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162551, Southern Agricultural Economics Association.

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