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Gasoline subsidy and consumer surplus in the Islamic Republic of Iran
Author(s) -
Shahmoradi Asghar,
Honarvar Afshin
Publication year - 2008
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/j.1753-0237.2008.00153.x
Subject(s) - subsidy , economics , economic surplus , inflation (cosmology) , gasoline , welfare , islam , islamic republic , population , market economy , geography , physics , demography , archaeology , sociology , theoretical physics , thermodynamics
Gasoline subsidy in Islamic Republic of Iran is a controversial issue. While a group of politicians believe that its merits outweigh its costs, some economists believe that its harms exceed the benefits. A new approach is taken to study the changes in social welfare because of gasoline subsidies for the period 1987–2005. The findings indicate that the consumers’ surplus has declined over time for a representative consumer. A large population growth, inflation and non‐substitutability of gasoline with other goods might have caused this phenomenon.