AN INVESTIGATION ON ALLOCATIVE EFFICIENCY OF TARGETING SUBSIDIES IN IRANIAN MANUFACTURING SECTOR: CASE STUDY OF PRICE DISTORTIONS IN INPUT MARKETS

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KESHAVARZ HADDAD GHOLAMREZA; FIROOZAN TOHEED; SADEGHI HOSSEIN

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Journal: Journal of Economic Studies and Policies Year:2012 | Volume:8 (18) | Issue:1 (90) Page(s): 111-136

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Title

AN INVESTIGATION ON ALLOCATIVE EFFICIENCY OF TARGETING SUBSIDIES IN IRANIAN MANUFACTURING SECTOR: CASE STUDY OF PRICE DISTORTIONS IN INPUT MARKETS

Author(s)

KESHAVARZ HADDAD GHOLAMREZA | FIROOZAN TOHEED | SADEGHI HOSSEIN | Issue Writer Certificate

Keywords

INPUT PRICEQ2

ENERGY SUBSIDIESQ2

ALLOCATIVE INEFFICIENCYQ2

SHADOW COST FUNCTIONQ2

MANUFACTURING SECTORQ2

ISURQ2

Abstract

In Iran’s economy, a high volume of ENERGY SUBSIDIES along with the other price distortions has caused inefficiencies in the resource allocation, through distortions in the relative prices of inputs and commodities. This study aims at the examination and estimation of cost burdens incurred which stems from the ALLOCATIVE INEFFICIENCY of price distortion in energy carriers pricing in Iran’s industry sector. We estimated ALLOCATIVE INEFFICIENCY using a SHADOW COST FUNCTION model based on a system of nonlinear equations which includes a price distortion equation. The cost model is estimated by the econometric method of Iterated Seemingly Unrelated Regression Equations (ISURE) and ‍Cross Section data-set of Iran’s industries. Our results show that, at the whole industry level, the costs of ALLOCATIVE INEFFICIENCY caused by all inputs’ price distortions are amounted to 45% of production costs of the firms in the industry sector. The extents of ALLOCATIVE INEFFICIENCY which are caused solely by distortions in the energy prices are equal to 34% of the production costs. Nonetheless, energy share of production costs increases to 10% from 5.7% actual level considering substitutionary and complementary relations among inputs after removal of the whole price distortion of energy input.

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APA: Copy

KESHAVARZ HADDAD, GHOLAMREZA, FIROOZAN, TOHEED, & SADEGHI, HOSSEIN. (2012). AN INVESTIGATION ON ALLOCATIVE EFFICIENCY OF TARGETING SUBSIDIES IN IRANIAN MANUFACTURING SECTOR: CASE STUDY OF PRICE DISTORTIONS IN INPUT MARKETS. JOURNAL OF ECONOMIC STUDIES AND POLICIES, 8 (18)(1 (90)), 111-136. SID. https://sid.ir/paper/219071/en

Vancouver: Copy

KESHAVARZ HADDAD GHOLAMREZA, FIROOZAN TOHEED, SADEGHI HOSSEIN. AN INVESTIGATION ON ALLOCATIVE EFFICIENCY OF TARGETING SUBSIDIES IN IRANIAN MANUFACTURING SECTOR: CASE STUDY OF PRICE DISTORTIONS IN INPUT MARKETS. JOURNAL OF ECONOMIC STUDIES AND POLICIES[Internet]. 2012;8 (18)(1 (90)):111-136. Available from: https://sid.ir/paper/219071/en

IEEE: Copy

GHOLAMREZA KESHAVARZ HADDAD, TOHEED FIROOZAN, and HOSSEIN SADEGHI, “AN INVESTIGATION ON ALLOCATIVE EFFICIENCY OF TARGETING SUBSIDIES IN IRANIAN MANUFACTURING SECTOR: CASE STUDY OF PRICE DISTORTIONS IN INPUT MARKETS,” JOURNAL OF ECONOMIC STUDIES AND POLICIES, vol. 8 (18), no. 1 (90), pp. 111–136, 2012, [Online]. Available: https://sid.ir/paper/219071/en

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