Thailand has adopted policies that promote the use of biofuel produced from local crops to reduce the country’s dependence on imported fossil fuel. The pricing policy was designed to encourage greater use in the transportation sector of gasohol, which is a blend of gasoline and ethanol. It consists of two measures, namely, a subsidy on gasohol and a tax on gasoline. Their effect was to make gasohol price lower than that of gasoline so that motorists might use more gasohol, which is a substitute to gasoline. However, the economic impact of the ...