An evaluation of the welfare effects of reducing energy subsides in Iran

► Reform of energy prices is an important element of the “Economic Reform Plan” for 2010-2014 for Iran. ► The implementation of this plan has affected both households' welfare and firms' profitability. ► Higher energy prices decrease energy consumption by Iranian households. ► Iranian household welfare will increase with a 100% or 200% rise in energy prices. ► Iranian household welfare will decrease with a 400% or 500% rise in energy prices.