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Title: Contributions of U.S. Crop Subsidies to Biofuel and Related Markets
Authors: Devadoss, Stephen
Bayham, Jude
Keywords: biofuel
environmental impacts
farm supports
welfare analysis
JEL Codes: Q18
Issue Date: 2010-11
Abstract: 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.
Institution/Association: Journal of Agricultural and Applied Economics>Volume 42, Number 04, November 2010
Total Pages: 14
From Page: 743
To Page: 756
Collections:Volume 42, Number 04, November 2010

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