Difference between revisions of "Lerner index"
From Conservapedia
(Undeadended) |
|||
| Line 1: | Line 1: | ||
| − | The Lerner index is a formula to quantify a firm's [[monopoly]] power: | + | The '''Lerner index''' is a formula to quantify a firm's [[monopoly]] power: |
:Lerner index = (P-MC)/P | :Lerner index = (P-MC)/P | ||
Revision as of 14:19, March 12, 2008
The Lerner index is a formula to quantify a firm's monopoly power:
- Lerner index = (P-MC)/P
where P is the price and MC is the marginal cost.
The index ranges from 0 (no monopoly power) to 1 (complete monopoly power when MC=0).
This index has been criticized for relying on MC, which is not usually known, and for being static rather than dynamic.
