A welfare analysis of the U.S. ethanol subsidy

Xiaodong Du, Dermot J. Hayes, Mindy L. Mallory

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)669-676
Number of pages8
JournalReview of Agricultural Economics
Volume31
Issue number4
DOIs
StatePublished - Dec 2009

ASJC Scopus subject areas

  • Agronomy and Crop Science
  • Economics and Econometrics

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