All of the following are measures of market power except the A) four-firm concentration ratio for an industry

Marketing Jan 14, 2021

All of the following are measures of market power except the

A) four-firm concentration ratio for an industry.

B) Herfindahl - Hirschman Index.

C) Minimum - Efficient Scale Index.

D) Lerner Index.

Expert Solution

The answer is C.

Minimum - efficient scale index is not a measure of market power but rather a tool used by a company to measure if it's utilizing all its production capacity. The index states that the lowest point of the cot curve enables it to produce a product at a competitive price. At that point, companies are able to achieve economies of scale essential to compete effectively in the industry. On the other hand, the four-firm concentration ratio is used to measure market power in an oligopolistic market. Lerner and Herfindahl- Hitchman also measure market power.

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