Contributions of U.S. Crop Subsidies to Biofuel and Related Markets

The U.S. crop subsidies provide incentives for farmers to expand feedstock production, which benefits the biofuel producers by lowering input costs. This study develops a general equilibrium model to analyze the effects of a reduction in the U.S. crop subsidy on biofuel industries and social welfare. The impacts of feedstock policies on the biofuel market are marginal. In contrast, the biofuel mandate has a larger impact and counteracts the effects of the crop subsidy reduction. The mandate increases the demand for feedstock and causes not only grain ethanol, but also cellulosic ethanol production to rise. The mandate exacerbates the distortion, and government spending increases significantly, leading to greater welfare loss.


Issue Date:
2010-11
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/100525
Published in:
Journal of Agricultural and Applied Economics, Volume 42, Number 04
Page range:
743-756
Total Pages:
14
JEL Codes:
Q18; Q27




 Record created 2017-04-01, last modified 2017-04-04

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)