Ethanol: No free lunch

Andrew Schmitz, Charles B. Moss, Troy Schmitz

Research output: Contribution to journalArticle

19 Scopus citations

Abstract

The sharp rise in energy prices in the 1980s triggered a strong interest in the production of ethanol as an additional energy component. Economists are divided as to the payoffs from ethanol derived corn in part because of the complex interrelationship between energy produced from ethanol and energy from fossil fuels. Using a welfare economic framework, we calculate that there can be treasury savings from ethanol using tax credits as these subsidies can be smaller than direct payments to corn farmers which are essentially eliminated from the expansion of ethanol. Also, to the extent that ethanol dampens fuel prices there can be a net welfare gain from ethanol production in the presence of ethanol subsidies.

Original languageEnglish (US)
Article number3
JournalJournal of Agricultural and Food Industrial Organization
Volume5
Issue number2
DOIs
StatePublished - Jan 1 2007

ASJC Scopus subject areas

  • Food Science
  • Business, Management and Accounting(all)
  • Economics and Econometrics

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