Majid Ahmadian (Faculty of Economics, University of Tehran) Mona Chitnis () (Research Group on Lifestyles, Values and Environment (RESOLVE) & Surrey Energy Economics Centre (SEEC), University of Surrey) Lester C. Hunt () (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)
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This study estimates a gasoline demand function for Iran using the structural time series model over the period 1968-2002 and uses it to estimate the change in social welfare for 2003 and 2004 of a higher gasoline price policy. It is found that short and long run demand price elasticities are inelastic, although the response is greater in the long run. Hence, social welfare is estimated to fall because of the higher gasoline price (ceteris paribus). However, allowing all variables in the model to change, social welfare is estimated to increase since the changes in the other variables more than compensate for the negative effects of the policy.
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Length: 32 pages Date of creation: Feb 2007 Date of revision: Publication status: Published in OPEC Review, 31(2), June 2007, pp. 105-124 (Revised Version with different title). Handle: RePEc:sur:seedps:117
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