This research applies recent developments in the analysis of firm location determinants, applying local geographic concentration indices to determine and the extent to which clustering influences the location decisions of cellulosic biofuel facilities. We focus on ethanol production from switchgrass and drop-in fuels made through pyrolysis. The economic sectors analyzed would be involved in the extraction, production, and distribution of intermediate and final fuel products, and the financing of businesses supporting these activities. We augment a cost-minimizing site location model with information about local employment patterns that would be engaged with a switchgrass-based cellulosic fuel sector. Employment concentration is determined using recent developments in the derivation of the traditional location quotient as a maximum likelihood estimator. The null hypotheses are that differences arising from advantages associated with each county are not different. Rejection of this hypothesis suggests that some sites have comparative advantage with respect to location advantage. The null hypothesis also suggests that the inclusion of labor concentration information in the overall cost structure will not impact the distribution of facilities. Region-wide economic impacts that follow the addition of multiple facilities are not expected to be different after inclusion of the employment location quotients as site suitability criteria.


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