Market Power in the Middle East
IMF Working Papers, January 10, 2025
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- Market Power in the Middle East
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Bibliographic details
- Authors: Yevgeniya Korniyenko, Ahmed K Tohamy, Weining Xin
- Published: January 10, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400296871.001
Overview and research questions
- Authors: Yevgeniya Korniyenko, Ahmed K Tohamy, Weining Xin
- Publication date: January 10, 2025
- Paper asks three questions:
- Is the Middle East (ME) uniquely uncompetitive?
- Has the evolution of market power in the region traced the global rise in market power?
- What government policies and actions influenced market power in the region and can taxes be a way to even the playing field?
Data and methods
- Data:
- Comprehensive firm-level data from Compustat between 2004 and 2022.
- Estimation approaches:
- Two methods for estimating markups:
- Production function approach.
- Cost-share approach.
Key findings
- Market power comparisons:
- Market power among listed firms in the ME is higher than in the US.
- Market power in the ME is on a downward trend.
- Policy impact:
- Value-added tax (VAT) reforms introduced by some Gulf states from 2018 to 2022 resulted in a reduction of market power.
- Reduction in market power from VAT is identified as an additional benefit beyond increasing fiscal space.
Policy implications and recommendations
- Policymakers should continue to use available regulatory levers to achieve economic efficiency and a level playing field.
- VAT could be considered as an alternative instrument to reduce market power and improve competition, in addition to its fiscal role.
Subject tags and keywords (as listed)
- Subjects: Competition, Economic sectors, Financial markets, Inflation, Oil sector, Prices, Taxes, Value-added tax
- Keywords: Competition, Firm Behavior, Global, Inflation, Market Power, market power in the Middle East, Markup, markups dynamics, markups estimate, markups in GCC country, Middle East, Oil sector, sample representativeness, Value-added tax
IMF Working Paper No. 2025/001; Pages: 40; DOI: https://doi.org/10.5089/9798400296871.001; ISBN: 9798400296871; ISSN: 1018-5941.
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- Working Paper