Loading...

Welfare Cost of Fuel Subsidy to Manufacturing Firms

Hojati Najafabadi, Ali | 2023

52 Viewed
  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 56462 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Rahmati, Mohammad Hossein; Madanizadeh, Ali
  7. Abstract:
  8. This research aims to explore the effectiveness of past tariff evolutions in shaping firms' response to current input prices. Additionally, it investigates how asymmetric fuel pricing across different industries influences overall industry efficiency and prosperity. Furthermore, the study examines the impact of fuel subsidies on the equilibrium distribution of companies independent of welfare decline. In Chapter 1, utilizing microdata from Iranian industrial workshops between 1386-1396 (2007-2017) A key finding is that new firms exhibit a significant and stronger reaction to energy price variations compared to other firms when it comes to technology choices.Chapter 2 presents a structural model featuring heterogeneous firms using microdata from industrial manufacturing between 1391-1396 (2012-2017) in Iran. It demonstrates how distortions resulting from previous policies can influence outcomes following price reforms. Understanding this phenomenon is crucial as it sheds light on why reducing industrial fuel subsidies through policy measures does not necessarily lead to an overall increase in productivity—particularly evident within countries implementing mandatory pricing mechanisms. By comparing two methods of fuel tariff policy implementation in Iran and assessing their effects within the real sector, we estimate both dispersion elasticity and energy consumption price elasticity in the production sector. The findings highlight that the impact of price dispersion on efficiency is comparable to that of fuel subsidies.In Chapter 3, we respond to existing literature estimating misallocation's (Hsieh and Klenow, 2009). Through a simulation exercise, we demonstrate how measurement errors can significantly influence calculations of efficiency losses. This research reveals an exceptionally high sensitivity of efficiency loss to both production accumulation and input substitution. Finally, this study aims to provide valuable insights into the relationship between tariffs, pricing policies, misallocation, and industry efficiency. It addresses crucial concerns within the real sector while contributing to our understanding of economic decision-making dynamics in Iran's context.
  9. Keywords:
  10. Energy Subside ; Manufacturing Firms ; Allocation Policies ; Energy Consumption Optimization ; Misallocation ; Fuel Consumption Reduction

 Digital Object List

 Bookmark

No TOC