Ukraine Gas Pricing Policy: Distributional Consequences of Tariff Increases

Pritha Mitra and Ruben Atoyan

No 2012/247, IMF Working Papers from International Monetary Fund

Abstract: Ukraine’s gas pricing policy subsidizes gas and heating for all households. As the cost of imported gas rises, this policy increasingly weighs on government finances, sustains energy over-consumption, dampens investment in delivery systems, and undermines incentives for domestic production. However, gas price hikes have been deferred to the medium-term as they are politically unpopular. Through estimation of household demand functions by income quintiles to evaluate the distributional consequences of tarrif reform, this paper finds that tariff reforms combined with targeted social support can address the economic inefficiencies of the current pricing policy without large welfare costs to the lower income segments of the population.

Keywords: WP; price; elasticity; subsidies; government expenditure and related policies; welfare; price elasticity; interaction elasticity; interaction term; heating tariff; tariff increase; Income; Tariffs; Consumption; Price elasticity; Europe (search for similar items in EconPapers)
Pages: 23
Date: 2012-10-15
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Citations: View citations in EconPapers (10)

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