Determine price for gas export according to shadow price with linier planning model

Message:
Abstract:

Nowadays there is a need for natural gas in almost every country. Considering the fact thatIslamic Republic of Iran is the second owner of natural gas reserves in the world,export of thisimportant factor would be one of the most inevitable subjects in our economy. Furthermore,thebenefits of oil export can be replaced by the benefits of gas export. But the high level ofdomestic consumption is of the most restrictive factors in promoting gas export.The main purpose of this paper is to determine an optimum price for Iran's natural gas exporttaking into account the domestic versus international demand for the fuel. In this way we practicea mathematical approach with a linear planning model,considering the concept ofopportunity cost in our analysis.In this way the optimum price would be reviled by adding theshadow price to the marginal cost. If we allocate our natural reserves to export,we should addthe minimum benefits of domestic consumption to marginal cost of production of gas. Obviouslyit will result in minimum price of gas export which is estimated to be 48.8 cent per cubic meter.

Language:
Persian
Published:
Journal of Financial Economics, Volume:4 Issue: 11, 2010
Pages:
71 to 108
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