Wednesday, September 17, 2008

Fuel subsidy IS a subsidy!

Thanks to a newly published working paper by Cut Dian Agustina, Javier Granado, Tim Bulman, Wolfgang Fengler and M. Ikhsan, I can support my earlier argument that -- contrary to this and this opinions ignoring the concept of opportunity cost -- fuel subsidy is a subsidy. Read my full comment here.

My points are: 1) if you don't consider opportunity cost a cost, then you don't consider opportunity revenue as important either; 2) in the current oil prices, fuel subsidy is no longer just an opportunity cost -- it is already an accounting cost!

Sorry, Mr. Kwik, with all due respect, you are wrong (again).

No comments:

Post a Comment