Comparing the Home Market Effects on Competitive Industries and Multilateral Monopoly

Document Type : Original Article

Authors

1 Professor in Economics, Department of Economics, University of Semnan

2 Assistant Professor in Economics, Department of Economics, University of Semnan

3 Professor in Economics, Department of Economics, University of Mazandaran

4 Ph.D. Student in Economics, Department of Economics, University of Semnan

Abstract

In this study, the home market effect on competitive and multilateral monopoly industries was studied concerning double-digit ISIC classification published by Statistical Center of Iran. For this purpose, dynamic panel data were implemented using Generalized Method of Moments (GMM) regarding the period 2001–2015. The results indicate that the demand coefficient in multilateral monopoly market industries is higher than in competitive market industries. The home market effect only exists in “the production of radio and television, and communication devices and machines” industries in multilateral monopoly market industries; thus, investing in this industry can lead to exports. In other industries, there have not been the home market effect, which means relatively higher demand for their products will generally lead to the net imports of the products.That is, the imports’ effect will dominate exports and will lead to imports.

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