An Analysis of the Impacts of Market Structure on Productivity in Iranian Manufacturing Sector

The impacts of market structure on productivity, having been studied through a variety of mechanisms, can be analyzed by using the factors related to market structure and productivity. This paper, studies the relationship between market structure and productivity in Iran's manufacturing sector, during 1995 – 2007. The results show that market competitive structure has positive effects on productivity but adverse effects on the growth of productivity. Monopoly structure and its profitability improves productivity growth by encouraging the firms to make investment in R&D. In monopoly industries the net entrance of firms produces positive effects, while in the competitive industries it results in negative effects on productivity growth. During the boom time, the growth of productivity in competitive industries, due to further entrance of firms, decreases, but in monopoly industries it increases which is the result of encouraging the firms to make investments and expand their market size. In addition, for both monopoly and competitive structures, imports enhance productivity growth by encouraging firms to reduce their expenses and increase their profitability. Keywords: