Based on their theoretical predictions, Kliauga, de Gorter, and Just (2008) and de Gorter, Drabik, and Just (2010) argue that the United States and the European Union establish the world ethanol and biodiesel prices, respectively. We test these theories using cointegration analysis and the...

We show carbon leakage depends on the type of biofuel policy (tax credit versus mandate), the domestic and foreign gasoline supply and fuel demand elasticities, and on consumption and production shares of world oil markets for the country introducing the biofuel policy. The components of carbon...