AN ANALYSIS AS TO THE CAUSAL RELATIONSHIP BETWEEN BIOETHANOL EXPANSION AND AGRICULTURAL CROP ACREAGE ALLOCATION IN THE UNITED STATES

Young-Jae Lee and P. Lynn Kennedy

No 6343, 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study analyzes the historical price response of individual crop acreage in order to determine the impacts of an expansionist policy in bioethanol production on the U.S. agricultural industry. In doing this, this study provides an economic foundation by using a traditional Rotterdam model to simulate a cropland demand system. Within the developed framework, this study estimates own and cross acreage elasticities and scale elasticities to show the impacts of acreage values on crop production and the relationship between total cropland and individual crop acreage. This study found that rice farming is most inelastic to own acreage value. Soybeans, hay, and wheat are shown to be good substitute crops for corn. Corn, soybeans, hay, wheat, cotton, barley, and rice are shown to have positive scale elasticity, while sorghum and oats are shown to have negative scale elasticities. The scale effects of corn, soybeans, hay, and wheat are relatively large, while those of cotton, sorghum, barley, rice, and oats are relatively small.

Keywords: Crop Production/Industries; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 24
Date: 2008
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea08:6343

DOI: 10.22004/ag.econ.6343

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