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Estimating Market Power and Strategies of Automobile Industry in Iran (Saipa and Iran Khoddro Companies Case Studies)

Author

Listed:
  • Kamran Barghandan

    (Department of Economics, Ph.D Student in Economics, University of Sistan and Baluchestan, Iran,)

  • Mosayeb Pahlavani

    (Department of Economics, University of Sistan and Baluchestan, Iran,)

  • Mohammad Nabi Shahiki Tash

    (Department of Economics, University of Sistan and Baluchestan, Iran.)

Abstract

Determining the structure of a market plays an important role for policy makers to adopt efficient policies to enhance social welfare of their societies. This welfare is fulfilled more and more whenever the industry is reached to a competitive framework. The Car maker industry is one of the important industries that create a considerable value added in terms of the pre and post production chains in all the countries. This industry is the second largest industry in Iran that uses about 600 thousands workers. Accordingly, this study first aims to estimate the strategies adopted by the dominant players of the industry, Iran Khodro and Saipa companies, based on a game-information theoretic framework and then measure the market power of them in accordance with the generalized maximum entropy estimator. The results show that the Lerner index value for Iran Khodro and Saipa is 0.67 and 0.49 respectively indicating that the two companies play an important role in the industry and the industry is so far from the competitive environment.

Suggested Citation

  • Kamran Barghandan & Mosayeb Pahlavani & Mohammad Nabi Shahiki Tash, 2017. "Estimating Market Power and Strategies of Automobile Industry in Iran (Saipa and Iran Khoddro Companies Case Studies)," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 701-705.
    • Handle: RePEc:eco:journ1:2017-02-92
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Market Power; Car Industry; Non-cooperative Game; Generalized Maximum Entropy Estimator;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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