The Political Economy of State Government Subsidy Adoption: The Case of Ethanol

19 Pages Posted: 7 Jun 2013

See all articles by Mark Skidmore

Mark Skidmore

Michigan State University - Department of Agricultural Economics

James Alm

Tulane University

Chad D. Cotti

University of Wisconsin - Oshkosh

Date Written: July 2013

Abstract

In this study, we examine the factors that determine the adoption of state economic development incentives in the ethanol industry. We compile data on the implementation dates for subsidies/tax credits for all states for the years 1984–2007, a period that covers the complete emergence of the biofuel industry in the United States and that was characterized by the passage of numerous state‐level subsidies and tax breaks aimed at increasing ethanol production. Using Cox proportional hazard regression analysis, we find that states are more likely to adopt ethanol subsidies when corn production is high, when corn prices are low and gasoline prices are high, when a state is affiliated with the National Corn Growers Association, when a check‐off is present, when a state has a high environmental score, and when state government is under the control of Democrats.

Suggested Citation

Skidmore, Mark L. and Alm, James and Cotti, Chad D., The Political Economy of State Government Subsidy Adoption: The Case of Ethanol (July 2013). Economics & Politics, Vol. 25, Issue 2, pp. 162-180, 2013, Available at SSRN: https://ssrn.com/abstract=2275768 or http://dx.doi.org/10.1111/ecpo.12008

Mark L. Skidmore

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

James Alm

Tulane University ( email )

United States
5048628344 (Phone)

Chad D. Cotti

University of Wisconsin - Oshkosh ( email )

800 Algoma Blvd
Oshkosh, WI WI 54901
United States

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