IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/201001010800001093.html
   My bibliography  Save this paper

Assessing the Welfare Effects of US Biofuel Policies

Author

Listed:
  • Moschini, Giancarlo
  • Lapan, Harvey
  • Cui, Jingbo
  • Cooper, Joseph

Abstract

This article assesses the main welfare implications of US policies to support biofuels, with an emphasis on corn-based ethanol. The analysis relies on an open economy, multimarket equilibrium model that links world and domestic energy and agricultural markets and explicitly accounts for the externalities of carbon emissions. The first-best policy in our context entails a carbon tax (implemented with a tax on fuel and a subsidy for ethanol), an import tariff on oil, and an export tax on corn. Although this policy is likely not feasible, we show that a second- best policy with an optimally chosen fuel tax and ethanol subsidy can approximate fairly closely the welfare gains associated with the first-best policy. The largest welfare gains to the US economy from first- and second-best policies arise from their impact on the terms of trade, particularly in the oil market.

Suggested Citation

  • Moschini, Giancarlo & Lapan, Harvey & Cui, Jingbo & Cooper, Joseph, 2010. "Assessing the Welfare Effects of US Biofuel Policies," ISU General Staff Papers 201001010800001093, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201001010800001093
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/ce042f89-55eb-4cbc-9299-102cde87eaf6/content
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:201001010800001093. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.