Dynamics of the Regressivity and Progressivity of LPG Subsidies and the Dignity Tariff in Ecuador, 2007–2025
DOI:
https://doi.org/10.36881/ri.v10i2.1400Keywords:
Energy subsidies, Regressivity, Progressivity, LPG, Dignity Tariff, TargetingAbstract
Energy subsidies have been key instruments of social policy in Ecuador; the discussion has revolved around their distributive potential and fiscal sustainability. The article comparatively examines the regressivity of the Liquefied Petroleum Gas subsidy and the progressivity of the Dignity Tariff during the 2007–2025 period, with an emphasis on distributive incidence and social effects. The research adopted a qualitative approach through a literature review of 26 documents published mainly between 2021 and 2025, including peer-reviewed scientific articles, technical reports, and institutional documents related to energy subsidies and their distributive incidence. The study was conducted through the interpretation and comparison of the institutional design of the subsidies, their institutions, allocation procedures, and patterns of benefit accumulation by income level. The analysis shows that the LPG subsidy, given its operation under a universal system that reduces its final price, is structurally regressive, since the greatest benefits are concentrated among higher-income households, which generates a high fiscal cost. In contrast, the Dignity Tariff
shows relatively progressive behavior because it is a subsidy targeted through technical electricity consumption thresholds, as it concentrates its benefits on vulnerable households. It is concluded that the potential progressivity of energy subsidies depends on their design.
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