The Impact of Market Penetration Costs and Rival Countries' Exports on Iran’s Cement Export Profits in an Oligopoly Framework

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Authors

Department of Economics, Shahid Chamran university of Ahvaz, Ahvaz, Iran

Abstract

This research is devoted to Iran's cement export market, one of Iran's primary and strategic industries, considering the significance of non-oil export developments in the country. The goal of this study is the effect of market penetration costs and rival countries' exports on Iran's cement export heterogeneous firms' profits. Thus, using the models by Melitz and Chaney, panel data, and dynamic panel econometrics, the impacts of the investigated factors on the export markets of Iranian cement were studied during 2003-20. The results showed that the effect of market penetration costs on the export profits of firms was negative and around 45%. The results of estimating the model under oligopoly conditions using Stackelberg’s method showed that the exports of competitors had a negative impact on Iran’s annual cement exports at almost 4%. Moreover, it was found that the share of penetration costs increased to 58% and shows the significance of this effect on the country's export profits.

Keywords

Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 17 January 2023

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