OPEC and the Environmental Impact of Biofuels
Hochman, Gal, Deepak Rajagopal, and David Zilberman
Much attention has been given to the introduction of biofuels assuming competitive oil markets. This paper argues that OPEC behaves as a cartel of nations and that this suggests different outcomes than those derived under the competitive or the standard cartel models. In particular, the paper shows that the competitive model overestimates the price effect of the introduction of biofuels but underestimates the quantity effect and, thus, the impact of the introduction of biofuels on the environment.
Gas, fuel, biofuel prices, subsidies, taxes, cartel of nations
Hochman, Gal, Deepak Rajagopal, and David Zilberman. 2011. "OPEC and the Environmental Impact of Biofuels." ARE Update 15(2): 9-11. University of California Giannini Foundation of Agricultural Economics.