Abstract
AbstractIn light of the move toward a low carbon economy, Malaysia is currently promoting the production of palm oil‐based biodiesel. This study develops a multicommodity, multistage, comparative static, partial equilibrium model for the Malaysian agricultural sector to be used to examine the impact of shifts in domestic demand for palm oil‐based biofuel on the Malaysian agricultural sector. The model links explicitly factor markets, related outputs, and consumer preferences for biofuels. Model results demonstrate a clear converse relationship between the variables representing the competing activities within the same sector. An increase in domestic biofuel demand leads to an increase in biofuel output and primary factor uses while the outputs of competing uses, especially food and other non‐food products decline markedly.
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