Market entry and exit in the spatial ethanol industry

This dissertation examines the corn based ethanol industry in the Corn Belt of the U.S. from three different angles: What affects ethanol plant location decisions, how does new ethanol capacity affect the local corn price, and what is the future landscape of ethanol production under an uncertain future? Ethanol production is a significant part of the American economy in terms of market demand for corn, job creation, household income, tax revenue, and decreasing reliance on foreign fuel. The EPA has supported the ethanol industry through the creation of the Renewable Fuels Standards put in place in 2007, however the very mandate created in part to secure the future of renewable energy in the U.S. is also a source of uncertainty. In late 2015, after speculation of a reduction in the requirement for ethanol, the RFS were renewed at an increased ethanol mandate than expected. These three papers enhance general understanding of how ethanol growth may occur, how new ethanol capacity affects local corn price in the more mature ethanol industry, and gives an idea of where future ethanol capacity will locate, if demand increases, or which currently producing locations are most vulnerable to a loss, if demand falls. This dissertation is the first study to account for the simultaneity between ethanol plant location decisions and corn prices in estimating the effect of new ethanol capacity on local corn price. All three papers contribute to the literature by including the spatial effects of surrounding counties and utilize information from the mature ethanol industry post-2008