期刊名称：Journal of Applied Economics and Business Research
电子版ISSN：1927-033X
出版年度：2012
卷号：2
期号：4
页码：184-211
出版社：Journal of Applied Economics and Business Research
摘要：The purpose of this paper is to asses whether breaking up the current monopolistic structure of the petroleum refining industry in Jordan could be empirically justified. This entails testing whether the industry is a natural monopoly or not. Testing natural monopoly requires evaluating the subadditivity of the cost function since it is both sufficient and necessary condition. Using time series data over the period 1961-2010, a system of multi-input and multi-output comprised of a translog cost function and two cost share equations was estimated using iterative seemingly unrelated regression method. The estimated cost function satisfied the regularity conditions including positive estimated cost, positive estimated marginal cost and monotonicity in input prices at all sample points while the curvature (quasi concavity) property in input prices was met at 86% of the sample points. The conclusion was that the cost function is subadditive and hence the industry was a natural monopoly over the period 1961-2010, indicating that the current market structure is an efficient one from a cost perspective. Accordingly, the Government of Jordan needs to take this result into consideration during its course of action to restructuring this industry after the conclusion of the concessionary agreement in 2008.
