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The Impact of Productivity Shocks on the Market Power
of Industrial Firms in Iran: A Panel SVAR Approach
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Marzieh Dindarrostami *    , Fatemeh Shamsoahrar |
| Department of Economics, Academic Center for Education, Culture and Research , dindarrostami@acecr.ac.ir |
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Abstract: (7 Views) |
The aim of this study is to investigate the effect of productivity shocks on the market power of 1202 Iranian industrial firms at the four-digit code level during 2002-2022(2520samples) using the PSVAR model. Market power was calculated using the translog function and Lerner index, and capital stock was estimated using the Klein model. Control variables include capital, firm size, value added, and cost structure.The results showed that improving productivity slightly increases the market power of firms (about 2.7%). Production capacity (value added) strengthens pricing power up to seven years, while capital stock has a small effect and market share has a divergent effect. Production costs, especially due to dependence on imported raw materials, inflation, and sanctions, severely reduce market power. According to the results of this study, increasing market power through productivity in the short term can help firms cope with economic challenges, but for sustainable growth, strengthening competitiveness by reforming monopoly structures and reducing institutional constraints is essential. These findings emphasize the importance of targeted policymaking to steer productivity toward competitiveness rather than monopoly. |
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| Keywords: Productivity, Market Power, Iranian Industrial Firms, Panel SVAR, Economic Efficiency. |
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Full-Text [PDF 1060 kb]
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Type of Study: Research |
Subject:
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