Optimal Pricing of Gasoline and Gas Oil in Terms of External Costs in the Transportation Sector in Iran

This paper aims to estimate the optimal prices of gasoline and gas oil in the transportation sector based on Ramsey pricing is the external cost. The model proposed in this paper analyzes both the supply and demand for gasoline and gas oil is a structural time series models. Results show price elasticity of gasoline and gas oil demand in the transportation sector was less than a -0.3 and -0.2 are, respectively. The results also suggest that the marginal cost of production per liter of gasoline and gas oil based on 1386 statistics, respectively, 4856 and 4706 is IRR. The results indicate that the external marginal cost per liter of gasoline and gas oil consumption in transportation sector respectively 1039.4 and 1108.3 is the IRR. Finally, the optimal prices for gasoline and gas oil obtained from the transport sector based on 1386 statistics, respectively 5316.3 and 4988.2 is the IRR.