Study Finds Government Mandates Superior to All Other Biofuels Policies, But Mixing With Subsidies Causes Adverse Effects; The Argument for a Direct CO2 Tax
Green Car Congress
FEBRUARY 17, 2010
For example, adding a biofuel subsidy with a consumption mandate fails to increase ethanol consumption but instead subsidizes oil consumption. The gap between the intercept of the ethanol supply curve and the oil price creates large deadweight costs that may overwhelm any external benefits.
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