The Effects of the Structural Variables of the Iranian Industries on the Social Cost: The SCP Approach

Document Type: Research Paper

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Abstract

This paper studies the effects of the structural variables of the Iranian industries sector on the welfare cost using to the Structure-Conduct-Performance (SCP) theory. In other words, we investigate the role of structural components and their effects on the size of the welfare cost in Iran's industry sector. We have used the Leibenstein's model to calculate the deadweight loss and then the panel data model has been used to quantify the model. Leibenstein believed that in many cases the monopolistic industries operate inefficiently due to being on the margin of safety. So in addition to the welfare triangle, the costs of the inefficiency of monopolistic industries should be also considered as the welfare cost. Our results demonstrate that there is a direct relationship between the welfare cost and all of the parameters of the model (barriers to entry, market concentration, economies of scale, state ownership share and firm size).

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References

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Iranian Journal of Economic Studies

Volume 3, Issue 1
Winter and Spring 2014
Pages 21-42

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History

  • Receive Date: 15 February 2013
  • Revise Date: 12 April 2014
  • Accept Date: 30 April 2014

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