The biofuel bubble in northern Sweden and Finland

Purpose – The purpose of this paper is to offer a critique of government intervention in the production of biofuel in northern Sweden and Finland, highlighting some of the welfare consequences.Design/methodology/approach – After a short review of government interventions, including laws, taxes and subsidies, Austrian economic principles are applied, which lead to universal statements about the impacts of government intervention.Findings – Government intervention on behalf of the biofuel production industry leads to the emergence of an investment bubble, with consequential negative impacts on welfare.Practical implications – The paper informs about the true costs of intervention in biofuel production, which suggests that policy makers may abstain from justifying interventions for the sake of increasing people's welfare.Originality/value – The paper contributes to the research of the production impacts of a new energy technology in the form of biofuel in particular and of governmental intervention in produc...

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