Who Did the Ethanol Tax Credit Benefit? An Event Analysis of Subsidy Incidence

44 Pages Posted: 8 Feb 2016 Last revised: 12 Jul 2023

See all articles by David Bielen

David Bielen

National Renewable Energy Laboratory (NREL)

Richard G. Newell

Duke University - Nicholas School of Environment; National Bureau of Economic Research (NBER); Resources for the Future

William A. Pizer

Duke University

Date Written: February 2016

Abstract

Using commodity futures contract and spot prices, we estimate the incidence of the US ethanol subsidy accruing to corn farmers, ethanol producers, gasoline blenders, and gasoline consumers at expiration in 2011. We find compelling evidence that ethanol producers captured two-thirds of the subsidy, and suggestive evidence that a small portion of this benefit accrued to corn farmers. The remaining one-third appears to have been captured by blenders, as we find no evidence that oil refiners or gasoline consumers captured any part of the subsidy. This paper contributes to understanding of biofuels markets and policy and empirical estimation of economic incidence.

Suggested Citation

Bielen, David and Newell, Richard G. and Pizer, William A., Who Did the Ethanol Tax Credit Benefit? An Event Analysis of Subsidy Incidence (February 2016). NBER Working Paper No. w21968, Available at SSRN: https://ssrn.com/abstract=2729068

David Bielen (Contact Author)

National Renewable Energy Laboratory (NREL) ( email )

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Richard G. Newell

Duke University - Nicholas School of Environment ( email )

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National Bureau of Economic Research (NBER) ( email )

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Resources for the Future ( email )

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William A. Pizer

Duke University ( email )

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