Measurement of Market Power and Cost Efficiency of Iran's Milk Industry

Measurement of market power and market structure determination of different products, always of basic and has been very important issues in the economy crushed because existence any kind of differently structural, including competitive and non-competitive on the amount production and prices of different products can have a significant influence. In this study, the structure of the domestic milk markets by using approach new empirical industrial organization was investigated. Data of the study was related to the period 2001-2014 and from the Herfindal index as a variable in the equation is the margin of the market. The results showed that during the period under study, the effect of market power and cost efficiency in milk production in the country, respectively, is equal 0.92 and -0.44. In fact, manufacturers have market power and can affect the prices and manufacturing firms were cost-effective and were establishing have benefit. In other words, the net effect that the sum of the effects of market power and cost efficiency achieved was equal to 0.48 that reflects an increase in milk product prices because of the market power top of the product. This high market power cause milk price increasing that affects on its consumption as decreasing. So, government can decrease price of milk and then increase in consumption by some policies such as household transfer payment.