The Effect of Industrial Concentration on Energy Efficiency in Iranian Industrial Sector

One of the key issues in the development of the industrial sector is to increase energy efficiency to improve the quality of the environment. On this issue, the study uses industrial sector data of two-digit ISIC codes for the period of 2007-2015 to estimate energy efficiency of sub-sectors of industry and evaluates the effect of industrial concentration on it. The results show that recycling has lowest energy efficiency equals to 0.01 and Manufacture of other non-metallic mineral products has highest energy efficiency which is equal to 0.78. Also, the Manufacture of fabricated metal products, Manufacture of other non-metallic mineral products and Manufacture of food products and beverages have lowest spatial concentration index equal to 0.031 and Manufacture of office, accounting and computing machinery in highest level is 0.394. The results of the Tobit estimation show that industrial concentration has negative effect on energy efficiency, and R&D expenditure, energy prices and human capital have a positive and effect on energy efficiency. The allocations of R&D expenditures to identify novel production processes, improve the quality of human capital and distributing industrial activities in provinces basic on relative advantages are effective policies to increase energy efficiency.