Author/Authors :
Salehi Sourmaghi Mohammad Hossain نويسنده Pharmacognosy department, Faculty of pharmacy , Doshman Ziari Esfandiar نويسنده Tehran West Branch, Islamic Azad University, Tehran , Sadegh Ziaei Mohammad نويسنده Tehran West Branch, Islamic Azad University, Tehran
Abstract :
Present study investigates the effect of soaring residential
electricity price on the welfare of rural individuals in Guilan
Province by Almost Ideal Demand System (AIDS) in which the
elasticity’s and welfare variations were calculated by Compensation
Variations (CV) and Equivalent Variations (EV) for the time
period of 1991-2012. It was shown that the absolute value of
income and price elasticity of electricity was less than one unit.
Low price elasticity of the demand shows the slight impact of
price variations on the demand for electricity in the studied
period, on the one hand, and the lack of an appropriate substitute
for electricity in residential sector, on the other hand. The calculation
of welfare variations and its comparison with the share
of electricity in the paid subsidy shows that with 50% and
100% increase in residential electricity price, the cash paid to
the households is less that the amount acquired. Accordingly, it
can be argued that the direct effect of residential electricity
price modification (increase) has not been compensated. In
fact, the welfare loss of the households, due to more expensive
electricity, is more than the acquired welfare. Yet, in a gradual
increase scenario, the calculated CV is less than the payments
to the families, and hence it is the only price policy that does
not impose a loss on families and improves their welfare.
