Evaluation of Social Cost of Monopoly in Iranian Industries: Leibenstein Approach

Authors

Department of Economics

Abstract

The main objective of this research is to evaluate the social costs of monopoly in Iranian concentrated industries during 1996-2006. Leibenstein approach has been employed to evaluate the social costs. Leibenstein believed that most monopolistic industries operate inefficiently because of being in the safe margin. Hence, he proposed that the costs of inefficiency be added to the welfare triangle. Results show that "manufacture of tobacco products, recycling, mnufacture of medical, precision and optical instruments, watches and clocks, manufacture of coke, refined petroleum products and nuclear fuel, manufacture of fabricated metal products, except machinery and equipment " have imposed the most social cost on the society due to their inefficiency and deadweight loss of  the welfare triangle. The social cost that these industries imposed on the society is equal to 100.47, 54.701, 41.039, 39.509 and 31.241 percent of the sales, respectively. In other words, a social cost of 24.01 percent of the sales is imposed on consumers in Iran by the concentrated industries.

Keywords


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