Alireza Ebrahimi Nourali; Karim Emami; Teymour Mohammadi
Abstract
The purpose of this paper is to design a unique pricing system (price-cap) for Iran's water and wastewater industry to ensure fair pricing for its customers, encourage effective investment planning, and improve corporate productivity and efficiency. To this end, the translog frontier cost function ...
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The purpose of this paper is to design a unique pricing system (price-cap) for Iran's water and wastewater industry to ensure fair pricing for its customers, encourage effective investment planning, and improve corporate productivity and efficiency. To this end, the translog frontier cost function form using the panel- data of thirty-five (35) water and wastewater companies over the period 2012-2017 is used to calculate the aforementioned components and X-factor and use it in the price-cap model for a five-year period, has been used. The price ceiling decreasing for the most efficient company was 2% and for the most inefficient company was 28%. In other words, in the first year of implementation of the price ceiling adjustment model, the most efficient water and wastewater company will be allowed to decrease its base or initial price by 2%, but the most inefficient company will be allowed to more decrease by 28%. It is this incentive that fulfills the purpose of implementing the price-cap model as an incentive regulation method.
Reza Shiva; Mohammad Hossein Rahmati; Ali Ebadi
Abstract
In this paper, we explore the level of monopoly in petrochemical products of Iran and the fluctuations of price using the trading data of these products in Iran Mercantile Exchange (IME). Considering the level of monopoly in this market, we are looking for a solution that lowers the gap between price ...
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In this paper, we explore the level of monopoly in petrochemical products of Iran and the fluctuations of price using the trading data of these products in Iran Mercantile Exchange (IME). Considering the level of monopoly in this market, we are looking for a solution that lowers the gap between price and quantity of current market with those of perfect competition market. Our solution is termed “Guarantee” which is a kind of security that is issued in a quantity that equates supply to market demand in the next period. This creates a two-stage game in which we satisfy the expectations for the demand of second stage in the first stage. We develop a model and show that in this solution, the equilibrium will have lower price and higher quantity in which only the shocks of the second stage are affecting equilibrium price and quantity. Thus, in a situation without an unexpected shock, the price and quantity of market will be equal to those of perfect competition equilibrium. Moreover, we examine the underlying prediction of this new tool by analyzing the performance of an existing security called “Salaf”. These two have the nature of future trading in common and our empirical test show that introducing “Salaf” lowers prices, as predicted by theory.
