 An evaluation of the welfare effects of reducing energy subsides in IranMansor Khalili Araghi and Sajad Barkhordari () Energy Policy, 2012, vol. 47, issue C, 398-404 Abstract: Energy prices in Iran have traditionally been heavily subsidized by the Government, and as a result, energy consumption per capita in Iran is close to the European Union level. The welfare effects of efforts to raise energy prices closer to world levels are examined in this paper. Reform of energy prices is an important element of the “Economic Reform Plan” (2010–2014) for Iran. We first analyze the relationship between energy consumption, energy and non-energy prices by estimating the household expenditure function. The results show that a higher energy prices will decrease energy consumption by Iranian households. Second, we evaluate the impact of a rise of energy prices on the household welfare by measuring the compensating variation (CV) in five steps with a compensating payment. The results show that Iranian household welfare will increase with a 100% or 200% rise in energy prices, if the government pays 20%, 30% or 50% of the $20 billion income resulting from removing energy subsidies. While, in contrast, Iranian household welfare will decrease with a 400% and 500% rise in energy prices, if the government payment is 20% or 30% of $20 billion income. Keywords: Energy consumption; Energy prices; Household welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:47:y:2012:i:c:p:398-404 DOI: 10.1016/j.enpol.2012.05.007 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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