A Test for Natural Monopoly in Iranian Electricity Distribution Industry: A Panel Random Coefficients Model Analysis

Document Type : Research Paper

Authors

1 Ph.D. Candidate in Economics, Shiraz University,

2 Associate Professor of Economics, Shiraz University

3 Associate Professor of Mathematics, Shiraz University

Abstract

In economics, natural monopoly is described as a situation in which, for structural reasons, only one firm finds it profitable to produce in the market. This Concept is more important and more practical in Industries that faced price and non-price regulation such as water, gas and electricity distribution and telecommunication. In this study natural monopoly structure in Iranian electricity distribution was investigated. To this, a Translog cost function was employed. Relative capital price, relative other input price and customer electricity sales were assumed as input price vector and output, respectively. In order to estimate the second order approximation of Translog cost function, the random coefficient model in panel data and the data of 2004 till 2014 were used. The results showed the existence of natural monopoly in some companies in contrast to other.

Keywords

Main Subjects

References

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