Calculation of the Geographical Concentration of Industries in Iran

Concentration is one of the important elements of market structure that deals with the distribution of market power. Geographical concentration is considered as one of the concentration dimensions that focuses on the pattern of the division of market power among different regions and evaluates the homogeneity and heterogeneity of distribution of activities among different regions. This type of evaluation could be helpful in understanding how are the industry structure and industrial policy and that the distribution of the various activities in the different regions, Therefore can it guide the policy makers. The, by purpose of this study is to measure geographic concentration of industries using the EG index for the year 2006 in Iran. And also to investigate the reasons have caused this kind of concentration. The results show that for more than half of the Iranian industries, there is severe geographical concentration. The highest geographical concentration belongs to the data processing and office machineries industry, in the order of 51%. The lowest is for food production and rubber products industries with the rate of 0/009 and 0/005 percent respectively. Natural advantages, access to raw material, transportation costs, as well as market access and spillover effects between industries could be mentioned as the most important reasons to create geographic concentration of industries in Iran.