The Impact of Product Market Distortions On Manufacturing TFP in Iran; The Role of Trade

Please enable javascript in your browser.

Eshagh Nia, Mohammad Sadegh | 2013

755 Viewed

Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 44033 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Fatemi Ardestani, Farshad
Abstract:
Producer-level data for Iranian manufacturing firms shows a large amount of dispersion and concentration in producer level sectoral shares, as well as a very strong relashionship between sectoral shares and markups. We Study the pro-competitive gain from trade in the Iran’s manufacturing sector. Domestic firms in Iranian manufacturing sector are protected via tarfiff and non-tariff barriers enforced by the government. In many sections of manufacturing sector, domestic firms feel little competition and charge high markups. The market power of domestic firms could be reduced by the reduction of tariff rate and increase in import share. As a result of foreign competition pressure, they would be forced to lower their markups. Therefore the markups average would be decreased and also the dispersion of markups could be reduced so that TFP could be increased by that reduction. According to data from about 13000 industrial firms in Iran, reducing tariff rate from 18% to 6% would result almost 27 percent increase in manufacturing TFP as a result of markup (average and dispersion) decreasing
Keywords:
Total Factor Productivity (TFP) ; Capital Market Distortion ; Misallocation ; Oligopolistic Competition

No TOC