Optimization of petrol demand through pricing system and improving the efficiency of car engine (in the framework of autoregressive model with distribution intervals and error correction model in the period 1988 to 2016)
Subject Areas : business management
Mohammad Reza
Shahbazi
1
(Department of Economics, Faculty of Islamic Studies and Economics, Imam Sadegh University, Tehran, Iran)
Amir Hossein
JanMohammadi
2
(Department of Economics, Faculty of Islamic Studies and Economics, Imam Sadegh University, Tehran, Iran)
Mahdi
Sadeghi Shahdani,
3
(Department of Economics, Faculty of Islamic Studies and Economics, Imam Sadegh University, Tehran, Iran)
Keywords: petrol demand, Pricing system, car engine efficiency, time series method,
Abstract :
petrol consumption in Iran has an average annual growth of 2.8 percent during the years 1988 - 2016.A good understanding of effective factors on petrol consumption in the short - term and long term can pave the way for the adoption of appropriate policies in this area. Promoting performance and modification of consumption patterns is essential to respond to an increasing demand for gasoline consumption, which has been emphasized in the overall policies of the resistance economy.In this paper, the effect of variables of real petrol price, average real household income and car engine efficiency in the form of an econometric model using time series modeling in Iran during the period 1988-2016 has been studied.The model is estimated using the autoregressive model with distributed intervals and the error correction model. The results show that among the variables used, petrol consumption is inversely related to the actual price of gasoline and the efficiency of motor vehicles, and is also directly related to the average real household income. According to the results, the effect of 1% improvement in car engine efficiency in reducing fuel consumption is 17 times more than 1% increase in real petrol price in reducing fuel consumption.
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