Estimation of the Price Elasticity of Gasoline Smuggling Demand in Iran

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Rafizadeh, Nima | 2016

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 49146 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Rahmati, Mohammad Hossein
Abstract:
This study investigates the price elasticity of gasoline smuggling demand in Iran. For this purpose, a panel data of monthly gasoline consumption has been used that contains data for 160 regions of distribution for Iran's Oil Production Company between 2005 and 2014. The results of estimating the monthly elasticity of gasoline smuggling demand in each region show a significant impact of the gasoline price differential between Iran and its neighboring countries, as well as the distance of each region with the neighboring countries on the demand. The results of this study show that whenever gasoline prices increase inside the country, the inclination to smuggling has been decreased due to a reduction in the gasoline price differential between Iran and its neighboring countries. In addition, with the rise of the currency price in Iran, the price elasticity of demand for gasoline smuggling has been increased. Generally, whenever the ratio of foreign to domestic prices had been higher, gasoline demand sensitivity to price in the neighboring countries has increased
Keywords:
Demand Estimation ; Price Elasticity ; Gasoline Price ; Gasoline Smuggling ; Gasoline Price Differential ; Panel Data Estimation

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