Assessing the Impact of Change in Gasoline and Jet Fuel Prices on Consumption and Production Expenditures in Roads and Air Transportation in Iran

In recent years, Iran has increased energy prices somewhat, but because of the very low starting point they remain far below opportunity costs. In this paper we examine two broad issues: First, the estimated impact of the energy price (Gasoline and Jet Fuel) rises on producer prices entire the economy and transportation sub-sectors, and the second, the Estimated of gasoline and jet fuel elasticity prices in the roads and air transportation networks for analyzing the reaction to energy prices (Gasoline and Jet Fuel) adjustment. In the first part, an input-output (IO) price model is used to simulate the impact of increase energy prices on the transportation sectors and aggregate price indices in Iran. In this paper, we used the 1994(1373) IO table. In the second part, I used the Macro-Demand Model and State Space modeling method in 1970s, 1980s and 1990s for transportation sub-sector. On this basis, road transportation sub-sector was divided in transport of traveler and boding categories. Gasoline price elasticity in transport of traveler was measured -0.27 and that of boding was -0.15. In air transportation sector, jet fuel price elasticity- in its highest extreme- was- 0.2.