Corn Ethanol and Fuel Prices
Curtis, Matthew J.D.
- Corn ethanol production has been increasingly significant in the last decade. While it has several desirable traits, such as being more environmentally friendly than fossil fuels and promoting energy independence, ethanol requires the diversion of corn from food to fuel. While it is very likely that some price increase will occur, some of the increase in demand for corn will be partially met by an ... read moreincrease in supply. The exact impact on price is not immediately obvious due to the complex nature of the corn market. This paper sets out to estimate price impacts by modeling this complex market. As the quantity and price of goods are endogenous within markets, three stage least estimators are used. By constructing a model incorporating the supply and demand equations of corn and various related agricultural products, the effects of ethanol production and pro-ethanol government policies on the price of agricultural goods is estimated.read less