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Gasoline Demand, Pricing Policy and Social Welfare in Iran


  • 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)


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.

Suggested Citation

  • Majid Ahmadian & Mona Chitnis & Lester C Hunt, 2007. "Gasoline Demand, Pricing Policy and Social Welfare in Iran," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 117, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  • Handle: RePEc:sur:seedps:117

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    References listed on IDEAS

    1. Lester C. Hunt & Yasushi Ninomiya, 2003. "Unravelling Trends and Seasonality: A Structural Time Series Analysis of Transport Oil Demand in the UK and Japan," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 63-96.
    2. Harvey, Andrew C & Koopman, Siem Jan, 1992. "Diagnostic Checking of Unobserved-Components Time Series Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 377-389, October.
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    1. repec:eee:enepol:v:114:y:2018:i:c:p:123-133 is not listed on IDEAS
    2. Mohamad Taghvaee, Vahid & Hajiani, Parviz, 2014. "Price and Income Elasticities of Gasoline Demand in Iran: Using Static, ECM, and Dynamic Models in Short, Intermediate, and Long Run," MPRA Paper 70054, University Library of Munich, Germany.
    3. Aliyu Barde Abdullahi, 2014. "Modeling Petroleum Product Demand in Nigeria Using Structural Time Series Model (STSM) Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 427-441.
    4. Nourah Al Yousef, 2013. "Demand for Oil Products in OPEC Countries: A Panel Cointegration Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 3(2), pages 168-177.

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