Iranian Market Power in Saffron World Market

Abstract The objective of this study is to investigate Iranian exporter's market power in saffron export market. To get the objective, Lerner index as well as saffron export price specification was applied. Lerner index was also calculated using saffron demand function. In export price specification also impact of exchange rate on export price was considered using regression analysis. Export demand and export price functions were estimated using panel dataset of saffron importing countries over 1994-2008. Demand function results showed that 1% increase in GDP makes saffron demand to rise by 2.2%. Lerner index was obtained 0.3 indicating market power for Iranian exporters. Export price estimation also showed market power explicitly such that Iranian exporters are able to set different prices among the markets.