Competition, Monopoly Power, Markup, Market Power Dispersion

This article is to determine the monopoly power of 22 food industries among 136 manufacturing industries at 4 digit ISIC level, and to determine the position of food industry in terms of market power dispersion among 23 fields in industry at 2 digit ISIC level. The study was done over the period of 2005 to 2013. The unstructured and parametric approach of Lu and Yu was used to estimate the monopoly power of industry. According to the results, the mark-up of 73 percent of food industries is more than 10 percent. Industrial production of bread and a variety of beverages are the largest monopoly power, while industries such as Production, processing and preserving of meat and meat products; Manufacture of vegetable and animal oils and fats; Manufacture of dairy products; Manufacture of grain mill products show a competitive behavior. On the whole, 87 percent of the Iranian industries have over 10 percent of monopoly power and uncompetitive behavior. Meanwhile, the industries have decreasing average of returns to scale and the position of food industry in terms of inequality rank of market power dispersion, is 12 among 23 industries with 2-digit level. Therefore, using the potential capacity of some industries such as flour production can be helpful, with liberalization the exports of their products while no subsidization is provided for the raw material. In order to increase the competitive nature of the other industries, a strategy can be; reducing and rationalizing the import tariffs with the aim of improving competition.

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