Evaluation of Market Structure and Measurement of Market Power in Iran’s Industrial Sector

The government's exclusive access to oil resources, governmental economy and the orientation of article 44 of constitution regarding privatization, are the main hindrances that affect competition, productivity and efficiency in Iran’s economy. In this regard, by the enforcement of "the law of general policies of article 44" it is aimed to restrict the government monopoly. The main objective of this paper is to identify Iran's markets structure and to measure the monopoly power in industrial markets based on 2-digit ISIC codes. To achieve this purpose, the Hall-Roger approach is applied to measure monopoly power in the manufacturing industries for the period of 1381 to 1397. The findings show that in most industries, the mark-up index is more than 1.2 and the Lerner index is more than 0.16, which indicates the existence of monopoly power. Sectors such as cement, lime and plaster, and pharmaceutical industries have the highest level of monopoly power. In addition, the results show that the industries under investigation lack economies of scale.