On the economic sustainability of ethanol E85

► Structural and reduced form models of the market for E85 are posited. ► Econometric estimates of the reduced form price and quantity equations produce intuitively plausible results. ► Key result: Cross elastity between E85 and gasoline prices does not differ significantly from unity. ► Policy implication: E85 is not now, nor is it likely to become, an economically sustainable substitute for gasoline.