Evaluation of Mark-up, Market power and Cost efficiency in Iran's Manufacturing Industries

The main purpose of this investigation is analyzing monopoly power by using conjectural variations approach, in Iran’s manufacturing industries for 4-digit ISIC code over the 1995 to 2011period. In this article a generalized model of Azzam and Lopez (2002) has been used, and supply and demand equations have been estimated with fixed effect two stage least squares (FE2SLS) method. The findings indicate that in 91% of the industries conjectural variation coefficient has been high, and in 88.4% of the Iranian industries price has been higher than marginal cost. Also the results of separating market power and cost efficiency effects on output price owing to changes concentration, in each industry, indicate that market power effect predominates over the cost efficiency effect in the Iran’s manufacturing industries.