Market Power in the Corn Sector: How Does It Affect the Impacts of the Ethanol Subsidy?

Market power is discussed in debates about subsidies for ethanol production. The structural conditions in the corn industry create a case for concerns about market power. We develop an analytical model for determining the production and price impacts and the distribution of benefits from the U.S ethanol subsidy when upstream sellers in the seed sector and downstream buyers in the processing sector may exercise market power. Results demonstrate that the impacts on prices and output are probably limited. Distribution impacts are much greater. Seed producers and corn processors with market power capture relatively large shares of subsidy benefits.


Issue Date:
2008
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/42457
Published in:
Journal of Agricultural and Resource Economics, Volume 33, Number 2
Page range:
169-194
Total Pages:
26




 Record created 2017-04-01, last modified 2017-08-25

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