Reforming energy prices to achieve sustainable energy consumption in the agriculture sector of Iran’s provinces: Using game approach

Abstract

The agriculture sector of Iran’s provinces, as one of the main factors of Iran’s total CO2 emissions, has an increasing trend in fossil energy consumption due to lacking a specific energy market and irrational pricing by the government. Hence, it is necessary to focus on approaches that can determine optimum prices for controlling both energy consumption and CO2 emissions. In this regard, the study aims to find an optimum price and sustainable amount of fossil energy consumption (including gasoline, natural gas, and electricity) in the agriculture sector of Iran’s provinces during 2001–16. We proposed both cooperative and non-cooperative game models based on competitive and seller monopoly markets to find an equilibrium price and demand with Nash equilibrium. Cost and demand-supply function coefficients estimated after the formulation of the problems in the markets, and then game-based models optimized to find reformed prices and demands. Empirical results highlight that both proposed game-based models can modify different types of energy consumption, as well as energy prices. Also, it seems that the cooperative game model can provide optimum prices for different groups of energy users, smooth the inequality in energy consumption, and prevent a sharp reduction in both GDP and agricultural production. On the contrary, the non-cooperative game model was appropriate for the next years.