The Impact of Targeted Subsidies on Combination of Energy Consumption in Iran: The Case of Non-Metal Mineral Manufacturing Industries

Although targeted energy subsidies has been considered by policy makers since the First 5-year Economic, Social and Cultural Development Plan in Iran, they were partially implemented only in recent years. This issue specifically has great importance for industry sector that has benefited from subsidized energy prices. This research attempts to investigate the possible impact of implementing Subsidy Reform Plan on manufacture of non-metal mineral products industry by using Artificial Neural Network approach. This investigation focuses on new entered firms into this industry as one of the most energy intensive industries. The results indicate that by replacing electricity real price with subsidized prices, the consumption of this energy carrier will generally decline by 16 percent. Despite this reduction, the large entrance of new firms has raised the consumption in some years. Therefore, the results show that targeted subsidies do not have large impact on energy consumption in manufacturing industries. Furthermore, the impact of this policy highly depends on combination of firms in each industry.