A welfare analysis of the U.S. ethanol subsidy

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

doi:10.1111/j.1467-9353.2009.01460.x

A welfare analysis of the U.S. ethanol subsidy

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

Agricultural and Consumer Economics

Research output: Contribution to journal › Article › peer-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 language	English (US)
Pages (from-to)	669-676
Number of pages	8
Journal	Review of Agricultural Economics
Volume	31
Issue number	4
DOIs	https://doi.org/10.1111/j.1467-9353.2009.01460.x
State	Published - Dec 2009

ASJC Scopus subject areas

Agronomy and Crop Science
Economics and Econometrics

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10.1111/j.1467-9353.2009.01460.x

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A welfare analysis of the U.S. ethanol subsidy

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