 IS THE SUBSIDY FOR BIOFUELS THE WAY TO GO?Crina Viju and William Kerr No 188117, 14th ICABR Conference, June 16-18, 2010, Ravello, Italy from International Consortium on Applied Bioeconomy Research (ICABR) Abstract: This paper examines the biofuel industry in Canada and US from a trade perspective. The development of a large market for biofuel is judged to have two main benefits for North America: a reduction of Greenhouse Gas Emissions (GHG) for Canada, while the U.S. is interested in reducing the dependence on imported oil from economically and politically volatile areas. A theoretical model is developed using option value theory to determine whether the same governmental policy (subsidization) can lead to different levels of optimal subsidies in each country, where the subsidy policy is driven by two distinct motivating factors: energy security and environmental commitments. Note that if the level of subsidies for the development of biofuels industry in the two countries differs considerably, the likelihood of a trade dispute arising increases. Keywords: Crop Production/Industries; Demand and Price Analysis; International Relations/Trade; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:itic10:188117 Access Statistics for this paper More papers in 14th ICABR Conference, June 16-18, 2010, Ravello, Italy from International Consortium on Applied Bioeconomy Research (ICABR) Contact information at EDIRC. |
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