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The Effect of Biofuels on the International Oil Market-super-


  • Gal Hochman
  • Deepak Rajagopal
  • David Zilberman


This paper derives a method to quantify the impact of biofuels on fuel markets, assuming that these markets are dominated by a cartel of oil-rich countries and that fuel prices in these countries are significantly lower than those in the rest of the world. We identify large differences between the effects of introducing biofuels using the proposed method (denoted the cartel-of-nations [CON] model), in contrast to the competitive or the standard cartel models. When compared with the CON model, the competitive model overestimates the reduction in fuel prices and underestimates the reduction in fuel consumption, and therefore the impact of biofuels on greenhouse gases. Copyright 2011, Oxford University Press.

Suggested Citation

  • Gal Hochman & Deepak Rajagopal & David Zilberman, 2011. "The Effect of Biofuels on the International Oil Market-super- ," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 402-427.
  • Handle: RePEc:oup:apecpp:v:33:y:2011:i:3:p:402-427

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    References listed on IDEAS

    1. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    2. Mark D. Partridge & Dan S. Rickman, 1998. "Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal," International Regional Science Review, , vol. 21(3), pages 205-248, December.
    3. Dan S. Rickman, 2002. "A Bayesian forecasting approach to constructing regional input-output based employment multipliers," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(4), pages 483-498.
    4. Christine Wieck & David Holland, 2010. "The economic effect of the Canadian BSE outbreak on the US economy," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 935-946.
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    Cited by:

    1. Doshi, Amar & Pascoe, Sean & Coglan, Louisa & Rainey, Thomas J., 2016. "Economic and policy issues in the production of algae-based biofuels: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 329-337.
    2. Maura Allaire and Stephen P. A. Brown, 2015. "The Green Paradox of U.S. Biofuel Subsidies: Impact on Greenhouse Gas Emissions," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    3. Antonio M. Bento, Richard Klotz, and Joel R. Landry, 2015. "Are there Carbon Savings from US Biofuel Policies? The Critical Importance of Accounting for Leakage in Land and Fuel Markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    4. Sexton, Steven & Eyer, Jonathan, 2016. "Leveling the playing field of transportation fuels: Accounting for indirect emissions of natural gas," Energy Policy, Elsevier, vol. 95(C), pages 21-31.
    5. Hill, Jason & Tajibaeva, Liaila & Polasky, Stephen, 2016. "Climate consequences of low-carbon fuels: The United States Renewable Fuel Standard," Energy Policy, Elsevier, vol. 97(C), pages 351-353.

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