Premium
The Impact of State Government Subsidies and Tax Credits in an Emerging Industry: Ethanol Production 1980–2007
Author(s) -
Cotti Chad,
Skidmore Mark
Publication year - 2010
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/sej.2010.76.4.1076
Subject(s) - subsidy , incentive , tax credit , production (economics) , ethanol fuel , government (linguistics) , economics , state (computer science) , business , tax incentive , public economics , agricultural economics , economic policy , biofuel , market economy , microeconomics , microbiology and biotechnology , linguistics , philosophy , algorithm , computer science , biology
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.