Location Choices of Ethanol Firms in the Midwest Corn Belt

Date
2010-01-01
Authors
Haddad, Monica
Taylor, Gary
Owusu, Francis
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Abstract

The Corn Belt has experienced a rapid expansion of corn-based ethanol plants. This has provided researchers the opportunity to examine the relative importance to the renewable fuels industry of several location factors previously identified as important to agro-industries. Using probit regression this study identifies the factors significant to ethanol firms’ location decisions in the four-state study area of Iowa, Illinois, Minnesota and Nebraska. In Iowa and Illinois, where corn is largely ubiquitous, firms move beyond corn supply to consider other localized factors in their decisionmaking process. Factors such as rail access, population density and proximity to blending terminals emerge as significant considerations. Probit regressions comparing states reveals the competitive advantages each offers to ethanol firms. The importance of the findings to economic development professionals is discussed and areas for future research are suggested.

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This is a manuscript of an article from Economic Development Quarterly, 24(1) 2010: 74-86.doi: 10.1177/0891242409347722. Posted with permission.

Keywords
location theory, ethanol, biofuels industry
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