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Consumer Surplus Changing in the Transition from State Natural Monopoly to the Competitive Market in the Electricity Sector in the Developing Countries: Azerbaijan Case

Author

Listed:
  • Mayis Gulali Gulaliyev

    (Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan,)

  • Gulshen Zahidqizi Yuzbashiyeva

    (Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan,)

  • Gulnara Vaqifqizi Mamedova

    (Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan,)

  • Samira Tahmazqizi Abasova

    (Azerbaijan State University of Economics, Baku, Azerbaijan,)

  • Fariz Rafiq Salahov

    (Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan,)

  • Ramil Ramiz Askerov

    (Institute of Economics, Azerbaijan National Academy of Sciences, Baku, Azerbaijan,)

Abstract

The objectives of the study are to analyze changes in consumer surplus and protect the social interest of poor households (HHs) in the transition from a state monopoly over the electricity sector to the market. For this purpose, the volume of HH electricity consumption by various incomes was calculated, the electricity demand function of HHs and the marginal cost of generating electricity were constructed. A methodology is given for calculating the electricity demand function for HHs and prices in an equilibrium market. The consumer surplus and its change are calculated. As well as there are given some recommendations to reduce the social burden for certain HH groups while raising prices in the transition from a monopoly to the market, and the amount for the state subsidy for poor HHs.

Suggested Citation

  • Mayis Gulali Gulaliyev & Gulshen Zahidqizi Yuzbashiyeva & Gulnara Vaqifqizi Mamedova & Samira Tahmazqizi Abasova & Fariz Rafiq Salahov & Ramil Ramiz Askerov, 2020. "Consumer Surplus Changing in the Transition from State Natural Monopoly to the Competitive Market in the Electricity Sector in the Developing Countries: Azerbaijan Case," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 265-275.
    • Handle: RePEc:eco:journ2:2020-02-32
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    consumer surplus; producer surplus; electric power sector; pricing; marginal cost; average costs;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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