Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities
Almost in the entire history of 20th century, vertically integrated monopolistic companies have controlled the electricity industry. In this traditional method, these firms were the only service provider in their territory; including power generation, transition, distribution and retail. Necessity o...
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| Format: | Article |
| Language: | fas |
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Allameh Tabataba'i University Press
2011-12-01
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| Series: | Pizhūhishnāmah-i Iqtiṣād-i Inirzhī-i Īrān |
| Subjects: | |
| Online Access: | https://jiee.atu.ac.ir/article_2755_b108d016b30313029d9d1045177da36a.pdf |
| _version_ | 1797369281508278272 |
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| author | Jafar Ebadi Amir Doudabi Nezhad |
| author_facet | Jafar Ebadi Amir Doudabi Nezhad |
| author_sort | Jafar Ebadi |
| collection | DOAJ |
| description | Almost in the entire history of 20th century, vertically integrated monopolistic companies have controlled the electricity industry. In this traditional method, these firms were the only service provider in their territory; including power generation, transition, distribution and retail. Necessity of economic efficiency deployment, resulted in structural reform in electricity industry that has created variety of subjects such as restructuring, unbundling, deregulation, reregulation and privatization. Electricity industry restructuring means breaking up vertical monopolistic control of governments on industry through unbundling into competitive and uncompetitive sectors. Electricity distribution sector essentially has natural monopoly characteristics therefore is not competitive and should work under regulation. The main objective of this research is to find the most efficient incentive regulation model for electricity distribution sector of Iran by which social welfare function may be maximized. Price and revenue cap models are the most prevalent incentive schemes that have been compared with each other. To design this model, cost function of 38 electricity distribution companies has been estimated and marginal cost of each company has been assumed as the first best price. Efficiency of these companies has been calculated by means of data envelop analysis method. Afterward 2 price regulation schemes has been modeled for years 1388 until 1390. Finally, residential electricity demand function has been estimated by means of autoregressive distributed lags method. Calculation of the difference between total welfare of each model with the first best price; indicates that without considering air pollution externalities, price cap scheme maximizes total welfare. However, considering the externalities, revenue cap model is found to have better effect on total welfare. |
| first_indexed | 2024-03-08T17:44:27Z |
| format | Article |
| id | doaj.art-fd05c7464bf244d996f8df6b617cae9b |
| institution | Directory Open Access Journal |
| issn | 2423-5954 2476-6437 |
| language | fas |
| last_indexed | 2024-03-08T17:44:27Z |
| publishDate | 2011-12-01 |
| publisher | Allameh Tabataba'i University Press |
| record_format | Article |
| series | Pizhūhishnāmah-i Iqtiṣād-i Inirzhī-i Īrān |
| spelling | doaj.art-fd05c7464bf244d996f8df6b617cae9b2024-01-02T10:43:15ZfasAllameh Tabataba'i University PressPizhūhishnāmah-i Iqtiṣād-i Inirzhī-i Īrān2423-59542476-64372011-12-01111331792755Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering ExternalitiesJafar Ebadi0Amir Doudabi Nezhad1دانشیار دانشکده اقتصاد دانشگاه تهرانکارشناس ارشد اقتصاد انرژی دانشگاه تهرانAlmost in the entire history of 20th century, vertically integrated monopolistic companies have controlled the electricity industry. In this traditional method, these firms were the only service provider in their territory; including power generation, transition, distribution and retail. Necessity of economic efficiency deployment, resulted in structural reform in electricity industry that has created variety of subjects such as restructuring, unbundling, deregulation, reregulation and privatization. Electricity industry restructuring means breaking up vertical monopolistic control of governments on industry through unbundling into competitive and uncompetitive sectors. Electricity distribution sector essentially has natural monopoly characteristics therefore is not competitive and should work under regulation. The main objective of this research is to find the most efficient incentive regulation model for electricity distribution sector of Iran by which social welfare function may be maximized. Price and revenue cap models are the most prevalent incentive schemes that have been compared with each other. To design this model, cost function of 38 electricity distribution companies has been estimated and marginal cost of each company has been assumed as the first best price. Efficiency of these companies has been calculated by means of data envelop analysis method. Afterward 2 price regulation schemes has been modeled for years 1388 until 1390. Finally, residential electricity demand function has been estimated by means of autoregressive distributed lags method. Calculation of the difference between total welfare of each model with the first best price; indicates that without considering air pollution externalities, price cap scheme maximizes total welfare. However, considering the externalities, revenue cap model is found to have better effect on total welfare.https://jiee.atu.ac.ir/article_2755_b108d016b30313029d9d1045177da36a.pdfregulationprice regulationelectricity distributionrestructuringsocial welfareexternalitiesefficiencydata envelop analysisautoregressive with distributed lags model |
| spellingShingle | Jafar Ebadi Amir Doudabi Nezhad Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities Pizhūhishnāmah-i Iqtiṣād-i Inirzhī-i Īrān regulation price regulation electricity distribution restructuring social welfare externalities efficiency data envelop analysis autoregressive with distributed lags model |
| title | Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities |
| title_full | Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities |
| title_fullStr | Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities |
| title_full_unstemmed | Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities |
| title_short | Selecting Optimal Incentive Price Regulation Model for the Electricity Distribution in Iran Considering Externalities |
| title_sort | selecting optimal incentive price regulation model for the electricity distribution in iran considering externalities |
| topic | regulation price regulation electricity distribution restructuring social welfare externalities efficiency data envelop analysis autoregressive with distributed lags model |
| url | https://jiee.atu.ac.ir/article_2755_b108d016b30313029d9d1045177da36a.pdf |
| work_keys_str_mv | AT jafarebadi selectingoptimalincentivepriceregulationmodelfortheelectricitydistributioniniranconsideringexternalities AT amirdoudabinezhad selectingoptimalincentivepriceregulationmodelfortheelectricitydistributioniniranconsideringexternalities |