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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
where P is the price and MC is the marginal cost.
where P is the price and MC is the marginal cost.
This index has been criticized for relying on MC, which is not usually known, and for being static rather than dynamic.
This index has been criticized for relying on MC, which is not usually known, and for being static rather than dynamic.
[[Category:Economics]]