Estimation and Comparison of Energy Efficiency in Iran’s Economic Sectors

Document Type : Original Article


1 Department of Economics, Faculty of Economics and Political Science, Shahid Beheshti University

2 MA in Economics in Energy Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University


Energy is one of the main inputs of production process. The scarcity of this valuable input has increased the importance of attention to its efficiency and higher energy efficiency leads to higher economic growth rates. The goal of this research is to estimate energy efficiency in quadruple sectors (agriculture, industry, transportation and services) of Iran’s economy, separately with the aim of increasing precision of calculations and improving quality of results. The efficiency of energy consumption in these four sectors is estimated with the use of a translog stochastic frontier analysis (SFA) and data for 1373-1391, based on theoretical and empirical grounds. Findings indicate that not only energy efficiency of these sectors were declined during the period considered, but the average energy efficiency of all sectors had also a declining trend. The technical efficiency in all sectors were increasing, of course slowly, in contrast to the trend of energy efficiency. The services sector has the lowest energy efficiency.


- Abbasinejad, H., & Vafinajjar, D. (2005). Investigating Energy Efficiency and Productivity in the Iranian Economic Sectors and Estimation of Energy Input and Price Elasticities in Industrial and Transportation Sectors by TSLS Method. Economic Research, 39(3), 113-137, (In Persian).
- Abrishami, H., & Niakan, L. (2010). Measuring the Technical Efficiency of Iranian Power Plants Using Stochastic Frontier Analysis (SFA) and Comparison with Selected Developing Countries. Quarterly Energy Economics Review, 26(7), 153-175, (In Persian).
- Adetutu, M. (2014). Energy Efficiency and Capital-Energy Substitutability: Evidence from Four OPEC Countries. Applied Energy, 119 ,363-370.
- Aigner, D. & Chu, S. (1968). On the Estimating the Industry Production Function. American Economic Review, 58, 826-839.
- Aigner, D., Knox Lovell, C. & Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Function Models. Journal of Econometrics (North-Holland publishing Company), 6, 21-37.
- Andrews-Speed, P. (2009). China’s Ongoing Energy Efficiency Drive: Origins, Progress and Prospects. Energy Policy, 37(4), 1331-1344.
- Battese, G. & Coelli, T. (1993). A Stochastic Frontier Production Function Incorporating a Model for Technical Inefficiency Effects. Department of Econometrics, University of New England, WP 69..
- Battese, G., & Coelli, T. (1988). Prediction of Firm-Level Technical Efficiencies with a Generalized Frontier Production Function and Panel Data. Journal of Econometrics, 38(3), 387-399.
- BP Statistical Review of World Energy, June 2015,
- Broadstock, D.C., Jiajia, L. & Dayong, Z. (2016). Energy Snakes and Energy Ladders: A (meta-) Frontier Demand Analyses of Electricity Consumption Efficiency in Chinese Households. Energy Policy, 91, 383-396.
- Farrell, M. (1957). The Measurement of Productive Efficiency. Journal of the Royal Statistical society, Series A (General), 120(3),253-290.
- Filippini, M., & Orea, L. (2014). Applications of The Stochastic Frontier Approach in Energy Economics. Economics & Business Letters, (3)1, 35-42.
- Ghanbari, A., Khaksari, S. & Khaksari, H. (2014). Factors Affecting Energy Productivity in Agricultural Sector of Iran. Agriculture Economic Research, 6(21), 1-21, (In Persian).
- Haghighat, J., Ansarilary, M.S. & Kiani, P. (2015). Evaluation of Energy Efficiency in Dwelling Sector of Iran’s ProvincesIranian Energy Economics4(13), 89-116, (In Persian).
- Heidari, E. & Sadeghi, H. (2005). Estimation of Energy Efficiency in Industrial Sector of Iran by a Partial Demand Adjustment Function. Economic Research, 40(1), 179-200, (In Persian).
- Iran’s Energy Balance Sheets (1994–2012). Office of Electricity and Energy Macro Planning, Ministry of Energy, (In Persian).
- Jondrow, J., Knox Lovell, C., Materov, S.I., & Schmidt, P. (1982). On the Estimation of Technical inEfficiency in The Stochastic Frontier Production Function Model. Journal of Econometrics (North-Holland Publishing Company), 19(2), 233-238.
- Meeusen, W. & Van Den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error.International Economic Review, 18(2), 435-444.
- Miao, R., & Jin, Y. (2014). The Measurement and Analysis of Regional Energy Efficiency in China. Journal of Chemical and Pharmaceutical Research, 6(3), 729-734.
- Mukherjee, K. (2008). Energy Use Efficiency in The Indian Manufacturing Sector: An Interstate Analysis. Energy Policy, 36(2), 662-672.
- Pitt, M. & Lung-Fei, L. (1981). The Measurement and Sources of Technical Efficiency in the Indonesian Weaving Industry. Journal of Development Economics, 9(1), 43-64.
- Schmidt, P. & Sickles, R. (1984). Production Frontier and Panel Data. Journal of Business & Economic Statistics, 2(4), 367-374.
- Sharifazadeh, M.R. & Basirat, M. (2013). Estimating Technical Efficiency of Iranian Oil and Gas Pipe Manufacturing Industry Using Stochastic Frontier Function Estimation. Economic Policies (Nameyemofid), Mofid University, 99, 181-200, (In Persian).
- Simar, L. (1992). Estimating Efficiencies from Frontier Models with Panel Data: A Comparison of Parametric, Non-parametric and Semi-parametric Methods with Bootstrapping. Journal of Productivity Analysis, 6, 63-76.
- Stern, D. (2012). Modeling International Trends in Energy Efficiency. Energy Economics, 34(6), 2200-2208.
- Zhou, P., Ang, B., & Zhou, D. (2012). Measuring Economy-wide Energy Efficiency Performance: A Parametric Frontier Approach. Applied Energy, 90(1), 196-200.
- Zou, G., Chen, L., Liu, W., Hong, X., Zhang, G., & Zhang, Z. (2013). Measurement and Evaluation of Chinese Regional Energy Efficiency Based on Provincial Panel Data. Mathematical and Computer Modelling, 58(5), 1000-1009.