Economic and Marketing Efficiency Among Corn Ethanol Plants

Juan P. Sesmero, Richard Perrin and Lilyan Fulginiti

No 100709, 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource Economics Society

Abstract: We extend data envelopment analysis (DEA) to decompose the economic efficiency of a sample of ethanol plants into internal (technical and allocative) and boundary (marketing) sources. This decomposition allows us to evaluate the channels through which different plant characteristics affect plant performance. Results show that plants are very efficient from a technical point of view. Plants with higher production volumes seem to perform better not because of economies of scale but because they can secure more favorable prices (higher marketing efficiency) and execute production plans accordingly (higher allocative efficiency). This may rationalize the increase in the size of the average plant observed in the industry in recent years despite evidence of close to constant returns to scale. This suggests that plants may have incentives to horizontally integrate. Our results do not seem to point towards the existence of strong incentives to vertically integrate. Plants seem to have achieved significant improvements in performance through experience and learning-by-doing. Plants that are privately owned do not seem to perform better that those owned by farmers’ cooperatives.

Keywords: Crop Production/Industries; Marketing; Production Economics (search for similar items in EconPapers)
Pages: 39
Date: 2011
New Economics Papers: this item is included in nep-agr and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/100709/files/Sesmero%20J.pdf (application/pdf)

Related works:
Working Paper: Economic and Marketing Efficiency Among Corn Ethanol Plants (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aare11:100709

DOI: 10.22004/ag.econ.100709

Access Statistics for this paper

More papers in 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().