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The Influence of Tariff Policy of Natural Monopolies on Producer Prices in the Russian Federation in 2003–2016

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  • PONOMAREVA, Ekaterina A.

    (Russian Presidential Academy of National Economy and Public Administration)

Abstract

This article examines the impact of state price regulation of natural monopolies on prices of manufactured goods in the main regions of the Russian Federation in 2003–2016. The author has developed a theoretical model of impact of regulated prices for products of natural monopolies on prices of industrial goods. It follows from the theoretical model that the increase in prices of goods and services produced by natural monopolies leads to an increase in production costs of the industrial sectors of the economy and thus to higher prices in the industrial sectors. In order to test the theoretical model, an econometric specification and an appropriate procedure for obtaining estimates were proposed. For the first time in the Russian economic literature, empirical estimates of transmission of shifts in prices for goods and services of natural monopolies to prices of domestic producers of manufactured goods have been received. Average growth in prices for goods and services of natural monopolies by 10% in industrial sectors and regions of Russia has led to an increase in prices of industrial sectors by about 2.0%. The most significant influence of prices for goods and services of natural monopolies on producer prices is observed in the mining industry, chemical production, and the industries of food production, including beverages, tobacco and other non-metallic mineral products. The assessments of the transfer of natural monopolies’ tariffs to prices of manufactured goods are highly relevant in terms of assessing the impact of tariff regulation on the achievement of targets for inflation established by the Bank of Russia.

Suggested Citation

  • PONOMAREVA, Ekaterina A., 2017. "The Influence of Tariff Policy of Natural Monopolies on Producer Prices in the Russian Federation in 2003–2016," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 42-71, December.
  • Handle: RePEc:rnp:ecopol:ep1762
    as

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    References listed on IDEAS

    as
    1. Joskow, Paul L. & Rose, Nancy L., 1989. "The effects of economic regulation," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 25, pages 1449-1506 Elsevier.
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    More about this item

    Keywords

    state regulation of natural monopolies; tariff policy; transfer of natural monopoly tariffs to real sector prices; industrial policy; cross subsidization; allocative efficiency.;

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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