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An application of Ramsey model in transition economy: a Russian case study

Author

Listed:
  • Babu Nahata

    (University of Louisville)

  • Alexei Izyumov

    (University of Louisville)

  • Vladimir Busygin

    (Russian Academy of Sciences)

  • Anna Mishura

    (Russian Academy of Sciences)

Abstract

This case study uses the Ramsey model to analyze whether the current electricity prices charged by the natural monopoly Novosibirskenergo in a major industrial region of the Russian Federation are socially optimal. Our estimates of demand elasticities for two major groups of consumers, namely households and industrial users, show that prices are not socially optimal. A decrease in price for industrial users and an increase in price for households would bring the prices closer to socially optimal.

Suggested Citation

  • Babu Nahata & Alexei Izyumov & Vladimir Busygin & Anna Mishura, 2003. "An application of Ramsey model in transition economy: a Russian case study," General Economics and Teaching 0307003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpgt:0307003
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP/PostScript/; pages: 29
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    References listed on IDEAS

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    2. Maria Chiara D'errico, 2020. "Demand Elasticity in the Italian Power Market: a Bayesian Experiment under dual pricing scheme," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    3. Paul A. Steenhof & Malcolm R. Hill, 2005. "Carbon dioxide emissions from Russia's electricity sector: future scenarios," Climate Policy, Taylor & Francis Journals, vol. 5(5), pages 531-548, September.
    4. Bigerna, Simona & Bollino, Carlo Andrea, 2016. "Ramsey prices in the Italian electricity market," Energy Policy, Elsevier, vol. 88(C), pages 603-612.
    5. Ayzenberg, N. & Kiseleva, N. & Zorkaltsev, V., 2013. "Models of Imperfect Competition in Analysis of Siberian Electricity Market," Journal of the New Economic Association, New Economic Association, vol. 18(2), pages 62-88.
    6. Proskuryakova, Liliana & Starodubtseva, Alena & Bianco, Vincenzo, 2020. "Modelling a household tariff for reducing sectoral cross-subsidies in the Russian power market," Energy, Elsevier, vol. 213(C).
    7. Wang, Chen & Zhou, Kaile & Yang, Shanlin, 2017. "A review of residential tiered electricity pricing in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 533-543.
    8. Lin, Boqiang & Wang, Yao, 2020. "Analyzing the elasticity and subsidy to reform the residential electricity tariffs in China," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 189-206.
    9. Atakhanova, Zauresh & Howie, Peter, 2007. "Electricity demand in Kazakhstan," Energy Policy, Elsevier, vol. 35(7), pages 3729-3743, July.
    10. Steele Santos, Paulo E. & Marangon Lima, Jose W. & Leme, Rafael C. & Leite Ferreira, Tiago G., 2012. "Distribution charges for consumers and microgeneration considering load elasticity sensitivity," Energy Economics, Elsevier, vol. 34(2), pages 468-475.
    11. Toroghi, Shahaboddin H. & Oliver, Matthew E., 2019. "Framework for estimation of the direct rebound effect for residential photovoltaic systems," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    12. Atalla, Tarek & Bigerna, Simona & Bollino, Carlo Andrea & Polinori, Paolo, 2018. "An alternative assessment of global climate policies," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1272-1289.
    13. Teresa Sanchez-Martinez & Noelina Rodriguez-Ferrero, 2017. "Ramsey Pricing for Cost Recovery Applied to Reservoir Infrastructure in Andalucía (Spain)," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-20, October.
    14. Xiaolei Wang & Boqiang Lin, 2017. "Electricity subsidy reform in China," Energy & Environment, , vol. 28(3), pages 245-262, May.
    15. Kenneth Gillingham & David Rapson & Gernot Wagner, 2016. "The Rebound Effect and Energy Efficiency Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 68-88.
    16. Iuliia Ogarenko & Klaus Hubacek, 2013. "Eliminating Indirect Energy Subsidies in Ukraine: Estimation of Environmental and Socioeconomic Effects Using Input–Output Modeling," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-27, December.

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    Keywords

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems

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