Analysingthe Countervailing Power Hypothesis in Iranian Industries

Document Type : Research Paper


1 MA of Economic Development and Planning, Bu-Ali Sina University-Hamadan- Iran

2 Associate Professor of economics, Faculty of economic and social science, Bu-Ali Sina University, Hamedan, Iran


The concept of countervailing power is a term to describe the situation in which the market power of one side (sellers) may be balanced by the market power of another side(buyers) in a given market. The purpose of this paper is to test this hypothesis and to determine whether the market power of sellers has had a restraining influence on increases in buyer market power in Iran’s large industries.To this end we use a panelof 4-digit ISICindustries data over the period 1995-2010.The findings of this paper support the countervailing power hypothesise in Iranian large manufacturing industries in whichthe industries with more market power on the seller side and less market power on the buyer side enhance the performance of the firms.