A general theory of cross-subsidization due to inframarginal support is developed. Two sources of output distortion are identified: exit deterrence and extramarginal output. Some firms would not be in business without the subsidy. Cost savings due to declining average costs are always greater...

A conceptual framework is advanced that determines world biodiesel prices, the policy parameters in the country establishing the price, and the binding mandate or tax exemption. The effect of a tax credit differs with international trade compared to traditional closed economy analysis. The U.S....

A framework is developed to analyze the effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy. Ethanol prices rise above the gasoline price by the amount of the tax credit. Corn farmers gain directly while gasoline consumers only gain from...

A biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices, depending on relative supply elasticities. Biofuel tax credits always reduce fuel prices. Tax credits result in lower fuel prices than under a mandate for the same level of biofuel production. If...

Biofuel policies are a subset of policies designed to achieve energy security, an improved environment, enhanced agricultural incomes, technological change, and overall economic benefits, with increased domestic energy production creating green jobs and foreign exchange savings. In assessing...

A general theory of cross-subsidization due to inframarginal support is developed. Two sources of output distortion are identified: "exit deterrence" and "extramarginal output." Some firms would not be in business without the subsidy. Cost savings due to declining average costs are always...

The efficacy of alternative biofuel policies in achieving energy, environmental and agricultural policy goals is assessed using economic cost-benefit analysis. Government mandates are superior to consumption subsidies, especially with suboptimal fuel taxes and the higher costs involved with...