Estimation of X-inefficiency and the Welfare Costs of Monopoly in the Chemical Products Industry: A Leibenstein - Comanor Approach

Rasekh Jahromi, Erfaneh; Ebrahimi, Mehrzad

doi:10.30473/jier.2025.72282.1465

Document Type : applicative

Authors

¹ PhD Student of Economics, Faculty Member of Economics, Pnu University, Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Tehran, Iran.

² PhAssociate Professor, Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Shiraz, Iran.Islamic Azad University, Tehran, Iran.

10.30473/jier.2025.72282.1465

Abstract

The aim of this study is to estimate x-inefficiency and welfare costs of monopoly in the chemical products industry. The Liebenstein-Komanor approach was used to estimate the welfare costs of monopoly. For this purpose, data from the survey plan of industrial workshops with ten workers or more from the statistics center from 2002 to 2018 for the chemical products industry with a four-digit ISIC code were used. To calculate the welfare costs of monopoly, the x-inefficiency index, marginal cost, and price elasticity of demand were obtained first, and then the welfare costs of monopoly were estimated. The survey results showed that the synthetic fiber production industry had the highest level of x inefficiency with a value of 0.59, while the plastic and synthetic rubber production industry had the lowest level of x inefficiency with a value of 0.23. Furthermore, based on the results obtained, the welfare cost of non-competitive performance in the plastic and synthetic plastic production industry in the first form had the highest amount, which was 7159843190 million rials.
Therefore, to improve the efficiency and competitiveness of Iran's chemical industry, it is recommended to facilitate access to financial resources, improve transportation and logistics infrastructure to reduce production and distribution costs, and enact appropriate laws and regulations to enhance product quality and reduce environmental pollution.

Keywords

Main Subjects

Industrial Economics, Structure_Conduct-Performance

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Estimation of X-inefficiency and the Welfare Costs of Monopoly in the Chemical Products Industry: A Leibenstein - Comanor Approach

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Volume 8, Issue 28June 2025Pages 17-30

Volume 8, Issue 28
June 2025
Pages 17-30