Social Costs due to Non-Competitive Structures in Manufacturing Industries: Dynamic Approach using Cowling-Muller Method

Document Type : Research Paper

Authors

1 Ph. D in Industrial Economics, Yazd University

2 Ph. D student, Shiraz University

Abstract

Pricing regime is the major difference of current market structures in every economy with perfect competition, and the major consequence of it is dead weight loss that imposed on society. However this subject considered on many studies with stationary approach, but, using dynamic approach this paper try to present a way for reduce deadweight loss using adjustment of industry structure based on past behaviors. To determine the market structure, Herfindahl-Hirshman and to estimation of deadweight loss, Cowling-Muller method is used. The results for 40 industries at 4-digit ISIC levels that have experiencedadeclineduringthe period indicated that, with an adjustment process, the totalannualamount ofwelfarethatcouldbe addedto thesociety is approximately 25 percent of industry total output. On this basis andwiththe realization of theconditionsof perfect competition, socialwelfarecan begreatlyincreased.This findings provide the more realization of economic justice as a dimension of social justice.

Keywords


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