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THE IMPACT OF ENERGY SUBSIDY ON NITROGEN FERTILIZER PRODUCERS IN THE GCC

Mohammed AL Mahish

Applied Econometrics and International Development, 2017, vol. 17, issue 2, 99-118

Abstract: This paper analyzes the impact of energy subsidies on a select sample of nitrogen fertilizer producers in the Arabian Gulf Cooperation Council (GCC) region. Subsidy rates were on average well above 50% and subsidy size reaches billions of dollars. Results show that output supply, input demand, and profit are highly responsive to changes in urea prices. The results also show that international natural gas prices have an inelastic positive impact on the GCC firms’ profit. The study concluded that subsidy policy in the GCC region has achieved one of its major goals by increasing demand for labor.

Keywords: Energy; Demand and Supply; Input-Output Model (search for similar items in EconPapers)
JEL-codes: B21 B41 D22 (search for similar items in EconPapers)
Date: 2017
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