1- , ebrahimi46@iau.ac.ir
Abstract: (418 Views)
This study provides an applied examination of the Comanor-Leibenstein approach in measuring the social costs of monopoly across selected Iranian industries during the period 2002–2022. Within this framework, welfare losses from monopoly are not confined to “allocative inefficiency” but also encompass “X-inefficiency” (resource waste arising from internal managerial shortcomings) as a fundamental component. Using panel data from the Statistical Center of Iran and employing advanced econometric techniques (such as GMM and SUR), key variables of the model—including price elasticity of demand, marginal cost, and X-inefficiency—were estimated. The findings indicate, first, that basic and strategic industries (such as iron and steel and automobile manufacturing) account for the largest share of total welfare costs. Second, the long-term trend of welfare losses is upward, with a particularly alarming acceleration in the final years of the period (2019–2022), nearly doubling in magnitude. These results highlight the intensification of monopoly-related crises and their direct impact on the decline of public welfare in Iran’s economy.
Keywords: Monopoly, X-inefficiency, Social Costs of Monopoly, Comanor–Leibenstein approach, Selected Industries
Type of Study: Research |
Subject:
industrial economics
Received: May 25 2026 | Accepted: Aug 22 2026
Received: May 25 2026 | Accepted: Aug 22 2026
References
1. Aguilar, G., & Portilla, J. (2024). Market power, social welfare, and efficiency in the Peruvian microfinance. Economia Politica, 41(1), 123-152. [DOI:10.1007/s40888-023-00321-y]
2. Akerlof, G. A. (1970). The Market for Lemons: Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics, 84(3), 488-500 (pp. 490-495). [DOI:10.2307/1879431]
3. Bain, J. S. (1956). Barriers to New Competition (1st ed., pp. 45-50). Harvard University Press. [DOI:10.4159/harvard.9780674188037]
4. Bhuyan, S. N. & Lopez, R. (1997). Oligopoly Power in the Food and Tobacco Industries. American Journal of Agricultural Economics, 3(79), 1035-1043. [DOI:10.2307/1244442]
5. Bhuyan, S., & Lopez, R. A. (1998). What determines welfare losses from oligopoly power in the food and tobacco industries?. Agricultural and Resource Economics Review, 27, 258-265. [DOI:10.1017/S1068280500006572]
6. Cespa, G., & Vives, X. (2022). Exchange competition, entry, and welfare. The Review of Financial Studies, 35(5), 2570-2624. [DOI:10.1093/rfs/hhab101]
7. Comanor, W.S., & Leibenstein, H. (1969). Allocative Efficiency, X-efficiency and the Measurement of Welfare Losses. Economica, 36(3), 304-309. [DOI:10.2307/2551810]
8. Cowling, K. I., & Mueller, D. C. (1978). The social costs of monopoly power. In The Economics of Industrial Organization (pp. 112-130). MIT Press. [DOI:10.2307/2231975]
9. Deng, Z., Luo, Y., Yang, C., & Fan, X. (2024). Effective Market Power and Welfare Loss. Australian Economic Papers. [DOI:10.1111/1467-8454.12386]
10. Dickson, V.A., & Yu, W. (1989). Welfare losses in Canadian manufacturing under alternative oligopoly regimes. International Journal of Industrial Organization, 2(7), 257-267. [DOI:10.1016/0167-7187(89)90022-2]
11. Ferna, J. A., Guevara, N., & Maudos, J. (2004). Measuring welfare loss of market power: an application to European banks. Applied Economics Letters, 11, 833-836. [DOI:10.1080/1350485042000263908]
12. Gumus, E. D. (2007). The Social Costs of Monopoly: A Survey and an Evaluation. Akdeniz İİBF Dergisi, 7(13), 149-164. Available at SSRN: https://ssrn.com/abstract=1075248.
13. Harberger, A. C. (1954). Monopoly and resource allocation. The American Economic Review, 44(2), 77-87.
14. Kasman, A. N. (2002). Cost Efficiency, Scale Economies, and Technological Progress in Turkish Banking. Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, 2(1), 1-20.
15. Lopez R. B., & Liron-Espana, C. (2002). Social Welfare and the Market Power-Efficiency Tradeoff in U.S. Food Processing: A Note. Journal of Agricultural & Food Industrial Organization, De Gruyter, 1(1), 1-10. [DOI:10.2202/1542-0485.1007]
16. Mankiw, N. G. (2021). Principles of Microeconomics (9th ed.). Cengage Learning.
17. Mwangi, I. W. (2024). The Impact of Power Sector Reforms on Efficiency, Access and Household Welfare in Kenya (Doctoral dissertation, University of Nairobi).
18. Pigou, A. C. (1920). The Economics of Welfare (1st ed., pp. 60-65). Macmillan.
19. Pindyck, R. S., & Rubinfeld, D. L. (2018). Microeconomics (8th ed.). Pearson.
20. Posner, R. A. (1976). Antitrust Law: An Economic Perspective (pp. 45-67). University of Chicago Press. [DOI:10.2307/1599199]
21. Raveendranathan, G., & Herkenhoff, K. (2024). Who Bears the Welfare Costs of Monopoly? The Case of the Credit Card Industry. The Case of the Credit Card Industry (December 9, 2019), 1-56. [DOI:10.2139/ssrn.3501917]
22. Rezitis, A. H., & Kalantzi, M. (2012). Measuring Market Power and Welfare Losses in the Greek Food and Beverages Manufacturing Industry. Journal of Agricultural & Food Industrial Organization, 1(10), 1-33. [DOI:10.1515/1542-0485.1368]
23. Schumpeter, J. A. (1942). Capitalism, socialism and democracy (1st ed., pp. 1-400). Harper & BrothersStiglitz, J. E. (2000). Economics of the Public Sector. W.W. Norton & Company.
24. Tirole, J. (1988). The Theory of Industrial Organization (1st ed., pp. 120-125). MIT Press.
25. Tirole, J. (2017). Economics for the Common Good. Princeton University Press. [DOI:10.2307/j.ctvc77hng]
26. Varian, H. R. (2010). Intermediate Microeconomics: A Modern Approach (8th ed.). W. W. Norton & Company.
| Rights and permissions | |
.jpg) |
This work is licensed under a Creative Commons Attribution 4.0 International License. |
