Document Type : Research Paper
Assistant Professor of Economics, University of Isfahan
Associate Professor of Economics, University of Isfahan
M.A. in Economics, University of Isfahan
The statistics show that the energy intensity in Iran is very unfavorable and its trend is alarming. There are two basic strategies to reduce energy intensity; the first strategy is to modify the relative prices of energy, especially through the energy taxation. The second strategy is to promote energy-saving technologies through research and development as a non-price strategy. The purpose of this study is simulation of a model for economics of Iran, for comparing the intensity of energy efficiency improvement through the energy taxation policy and the R&D subsidies policy. For this purpose a three-part general equilibrium model has been used. The period of implementation of the model has been considered as a 15-year time span since 2011. At the same time, the effect of policies analyzed on the labor demand as a production factor. The results show that a 40% energy tax improves energy efficiency by 52.74%, while a gentle R&D subsidy (20%), improve energy efficiency by 54.69%. So R&D subsidy policy for technical change is more effective than the tax policy in improving energy efficiency in Iran.