The Effect of Electricity Price Increase on Net Welfare of Different Income Groups: The Case of Iran

Subject Areas : Applied Economics

وحید فرمان آرا ^{1 *} , سید عبداله موسوی ^{2 *}

1 - ندارد
2 - ندارد

Received: 2013-05-22 Accepted : 2013-11-15 Published : 2012-09-22

Keywords: Dead Weight Loss, Compensated Variation (CV), ARDL,

Abstract :

The purpose of this paper is to investigate the effect of increasing electricity price on compensated variation (CV) and deadweight loss (DWL) of different income groups in Iran for 1981 – 2008 period. To do so, an Auto Regressive Distributed Lag (ARDL) model was used and five electricity demand functions were estimated in different income groups. Then on the basis of this estimation CV and DWL were calculated. The results of this research are as follows: By increasing electricity price and use direct subsidy, the welfare of low and middle income groups will increase.By increasing electricity price and use direct subsidy, the welfare of high income groups will decrease.