Measurement of Conjectural Variations Elasticity in an Oligopoly Structure (Using Iwata Approach for Iranians Food and Beverage Industry)

Abstract

In this paper, we investigate Conjectural Variations elasticity in Iranians Food and Beverage industry using Iwata approach, The conjectural variation function is extracted from demand and supply information also optimization process on producers’ behavior. The experimental estimates of conjectural variation elasticities were obtained based on price elasticity of demand, cost elasticity and marginal cost elasticity for the selected industries. In this research demand function AIDS was used to obtain the price elasticity. The AIDS function was estimated using SUR and the demand price elasticity is calculated by calfent. The results show that "Vegetable oils and animal" industry with 19.37 have the most conjectural variation elasticity among the selected industries (The more divergent the conjectural variation elasticity is from zero the more likely the monopoly exists). In addition, dairy, sugar and malt industries have the most conjectural variation elasticity with 18.01, 17.18, and 10.51 respectively.

Keywords

• Conjectural Variation elasticity
• Oligopoly
• Market Power
• Industry