Measuring Market Power (Using Markup) for Iran's Economy

In this paper, using Iran's manufacturing plant panel data of firms with ten or more workers, markup's evolution at the firm level has been studied for Iran's economy from 2003 to 2013. Following the ACF approach, a translog production function has been estimated for each industry. Then, after estimating each firm's labor elasticity trend, we used the DLW approach to estimate and analyze the distributional variation of markup through time and among Iran's industries. We plot the kernel density of markups for the first and last year in data and show that the last year's markup distribution has become fattened in its upper tail compared to the first year. Next, we show that markups' distribution considerably differs from one industry to another, and each industry has a different weighted average markup trend. Finally, we show that exporter firms have charged more markup compared to domestic ones, and sanctions have positively affected this markup premium.