Impact of renewable fuels standard ethanol mandates on the corn market
Article first published online: 4 JAN 2010
© 2010 Wiley Periodicals, Inc.
Volume 26, Issue 1, pages 49–63, Winter 2010
How to Cite
Anderson, J. D. and Coble, K. H. (2010), Impact of renewable fuels standard ethanol mandates on the corn market. Agribusiness, 26: 49–63. doi: 10.1002/agr.20202
- Issue published online: 4 JAN 2010
- Article first published online: 4 JAN 2010
Since 2002, the Renewable Fuels Standard has established mandated levels of ethanol blending in gasoline. Mandated ethanol use represents an important component of ethanol demand. Thus, the ethanol mandates influence derived demand for corn. This work investigates the potential impact of ethanol mandates on equilibrium corn prices and quantities, focusing on how the mandates influence market participant expectations. Results illustrate that due to the stochastic nature of supply and demand shocks, even a mandate that is technically nonbinding can have a substantial impact on corn prices and quantities through the mandate's impact on the price-responsiveness of demand from the ethanol sector. [JEL classifications: Q13, Q42, Q48]. © 2010 Wiley Periodicals, Inc.