Natural Gas Consumption in Bolivia : A Quadratic Almost Ideal Demand System Application

This document tries to quantify the possible impacts, on the natural gas consumption, of changes in the flat sale price, to the final consumer, for the natural gas distribution system in Bolivia, in particular, it was analyzed the progressivity of this policy on households from eight urban cities. The results obtained through the ‘Quadratic Almost Ideal Demand System' (QUAIDS) suggest that, a lineal decrease of the natural gas price for all the families presents an important regressive component. The reason is clear, high income families can, with high probability, modify its durable goods portfolio and take advantage of the benefits from reduced prices. In this sense, non lineal prices could be an attractive instrument to achieve bigger progressivity inside the tariffs system on the natural gas distribution system in Bolivia