Considering the effect of targeting the energy carrier subside on urban families’ food expenses in Kerman

Targeting energy subside means removing subside on energy carrier price, which can both increase economic efficiency (optimized balance between supply and demand, increase in consumption efficiency and changing its pattern) and fair income distribution. For this, first, the consumption patterns of urban families in Kerman were considered, by using the Quadratic Almost Ideal Demand System and families’ income-expense data between 2002-2007, by income deciles. Then the income and price elasticity were examined. The mentioned groups includes: food, energy, clothes, transportation, communication and other goods. For all income deciles, as it was expected, the price elasticity is less than zero and the income elasticity is more than zero. Then the food support boundary of consumers was defined in 2007 and the effect of targeting energy subside on food support boundary was measured. The results showed that by increasing energy carriers’ price and cash payment of subside to consumers, the food support boundary of each citizen decrease from 211699 Rial to 165229 Rial. This project, generally, shows that before the implementation of subside targeting policy the first, second and third deciles and after the implementation of this policy the first and second deciles were enjoyed from food support.