Munich Personal RePEc Archive

Energy populism and household welfare

Cont, Walter and Hancevic, Pedro and Navajas, Fernando H. (2011): Energy populism and household welfare.

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Abstract

We study a cycle of subsidized energy prices and estimate its welfare impact on households in the Buenos Aires Metropolitan Region. A simple framework explains its emergence in terms of the preference of a median household (voter) for receiving transfer gains followed by a future flow of transfer losses. We evaluate actual transfers and welfare effects that a departure of prices of natural gas and electricity generation from opportunity costs since 2003 had on households and explore the impact of a way back to opportunity cost pricing.

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