Optimum Natural Gas Pricing in Great Khorasan Province Gas Company by Ramsey Method

Public pricing of products is one of the most important economical issues, since any changes in the pricing, affects both the welfare of consumers and quantity of goods and Services which are produced. This paper deals with the optimal gas pricing in different sectors, including households, public- commercial and industrial sectors by the Ramsey method of pricing. In this regard, at the first market demand is estimated and then price elasticitiy’s of demand for different sectors of economy are calculated. Regarding to Ramsay pricing method which, is based on the assumption of increasing return to scale, and one of its application is natural monopoly, after the estimation of natural gas production function, the issue of existence of increasing return to scale is surveyed in this industry. After determination of production function, marginal cost of industry is calculated. And at the end with solving Ramsey equation system via Matlab software, optimal prices in all sectors are calculated in ۲۰۰۶, and compared with the current prices. These prices are estimated on the basis of demand elasticities in different sectors and non - lose of Khorasan Gas Company.