## Market Power in the Middle East

_IMF Working Papers, January 10, 2025_

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**Canonical URL:** [Market Power in the Middle East](https://www.imf.org/en/publications/wp/issues/2025/01/10/market-power-in-the-middle-east-559692)

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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

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### 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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_Source: https://www.imf.org/en/publications/wp/issues/2025/01/10/market-power-in-the-middle-east-559692_