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The Theory of Concentration Oligopsony


  • Majid Ahmadian

    (full professor of economics at the university of Tehran)

  • M.A.Motafaker Azad

    (assistant professor of economics at the university of Tabriz)


This paper originates the theory of buyer concentration for a main raw material input for a single processing industry. The oilgopsony concentration is obtained and subsequently decomposed into several factors, affecting indirectly the industry's profitability. It is found that the leading firms' efficiencies hypothesis is reaffirmed due to variations associated with the marginal productivity differentials. This finding is based on concentration separation approach rather than analyzing the cost-efficiency effect against market power effect from increasing concentration on the industry's markup, provided by structural approach of minimum cost function

Suggested Citation

  • Majid Ahmadian & M.A.Motafaker Azad, 2006. "The Theory of Concentration Oligopsony," Iranian Economic Review, Economics faculty of Tehran university, vol. 11(1), pages 81-92, winter.
  • Handle: RePEc:eut:journl:v:11:y:2006:i:1:p:81

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    References listed on IDEAS

    1. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    2. Ani L. Katchova & Ian M. Sheldon & Mario J. Miranda, 2005. "A dynamic model of oligopoly and oligopsony in the U.S. potato-processing industry," Agribusiness, John Wiley & Sons, Ltd., vol. 21(3), pages 409-428.
    3. Azzam, Azzeddine M, 1997. "Measuring Market Power and Cost-Efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
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