Comparative Analysis of Oil and Gas-Based Energy Taxation and R&D Subsidies on Energy Efficiency in Iran

Document Type : Research Paper

Authors

1 Assistant Professor of Economics, University of Isfahan

2 Associate Professor of Economics, University of Isfahan

3 M.A. in Economics, University of Isfahan

Abstract

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.

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Main Subjects

References

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Quarterly Journal of Applied Theories of Economics
Volume 5, Issue 2 - Serial Number 17
September 2018
Pages 103-126

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