The Impact of State Government Subsidies and Tax Credits in an Emerging Industry: Ethanol Production 1980–2007 |
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| Authors: | Chad Cotti Mark Skidmore |
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| Institution: | 1. Department of Economics, University of Wisconsin–Oshkosh, 800 Algoma Boulevard, Oshkosh, WI 54901, USA.;2. Department of Agriculture, Resource and Food Economics and Department of Economics, 208 Agriculture Hall, Michigan State University, East Lansing, MI 48824-1039;3. USA. |
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| Abstract: | This article examines the effects of state economic development incentives in the emerging ethanol industry. We compiled data on ethanol production capacity and subsidies/tax credits for all states for the years 1980–2007, a period that covers the complete emergence of the biofuel industry in the United States. Importantly, this time period was characterized by the passage of several state‐level subsidies and tax breaks aimed at increasing ethanol production. Hence, this panel documents a substantial amount of within‐state variation in policies from which to identify an effect. We find that some incentives directed at ethanol production have a significant effect on a state's production capacity. |
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