برنامهریزی و بودجه (May 2022)
Measuring Market Power (Using Markup) for Iran\'s Economy
Abstract
This paper attempts to investigate the markup's evolution at the firm level for Iran's economy for the period 2003–2013, using Iran's manufacturing plant panel data of firms with ten or more workers. Following the ACF approach, a translog production function has been estimated for each industry. Then, after estimating each firm's labor elasticity trend, we used the DLW approach to estimate and analyze the distributional variation of a markup over time and among Iran's industries. We plot the kernel density of markups for the first and last year in the data and show that the last year's markup distribution has become fattened in its upper tail compared to the first year. Subsequently, it is demonstrated that markups' distribution considerably differs from one industry to another, and each industry has a different weighted average markup trend. Finally, it is illustrated that exporting firms have charged more markup compared to domestic ones, and sanctions have positively affected this markup premium.