Horváth Gábor — Kotek Péter — Simonovits András — Takácsné Tóth Borbála

Subsidizing energy prices in Hungary - a simple model

In this study, we model the subsidy system for household natural gas, introduced in August 2022. First, we describe the new system, then we compare it to various alternative subsidy systems. Based on a detailed model, we estimated the expected impact of the change in residential gas price regulation on natural gas consumption and its welfare effect. We then compared this reform with three alternative regulatory regimes: a) maximizing social welfare with a given subsidy, b) maximizing consumption reduction while maintaining achieved welfare, and c) requiring minimum support while maintaining achieved welfare. Our results need refinement, such as modification in the social welfare function.

LXX. évf., 2023. June (589 - 612. O.), DOI:10.18414/KSZ.2023.6.589, Study

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