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Monopoly Power in Iranian Rubber and Plastics Industries: A Comparative

Author

Listed:
  • Khodadad Kashi, Farhad

    (Professor of Economics, Payam Noor University)

  • Norani Azad, Samaneh

    (Assistant Professor of Economics, Payam Noor University)

  • Geravand, Khadijeh

    (MA in Economics, Payam Noor University)

Abstract

The main purposes of this article are the evaluation of competition and comparison of market power in rubber and plastics industries with two non-structural approaches. To meet this ends Bresnehan-Lau (1982) and Panzar-Ross (1987) models were used. Data in 4-digit industries for rubber and plastics sub-sectors over the period of 1995-2011 collected from Iran’s statistical center. Equations used in this study consist of supply-demand and reduced form revenue functions estimated with two stage least squares fixed effect (FE2SLS) and least square dummy variables (LSDV) methods respectively. Results indicated that the extent of conjectural variation coefficient was about θ=0.82 because of the fact that firms cooperate with each other, therefore there was imperfect competition structure in this sector. On the other hand, the sum of elasticity’s reduced form revenue with respect to input price was about H=0.81, so market structure was featured as a monopolistic competition. In addition, Comparative results of two approaches confirmed depletion of competition in Iranian rubber and plastics industries.

Suggested Citation

  • Khodadad Kashi, Farhad & Norani Azad, Samaneh & Geravand, Khadijeh, 2015. "Monopoly Power in Iranian Rubber and Plastics Industries: A Comparative," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 2(3), pages 27-48, December.
    • Handle: RePEc:ris:qjatoe:0018
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    Keywords

    Market power; Conjectural variation; H-statistic; Competition; Monopoly;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L69 - Industrial Organization - - Industry Studies: Manufacturing - - - Other

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