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Homework answers / question archive / Which of the following measures market power? a

Which of the following measures market power? a

Marketing

Which of the following measures market power?

a. Rothchild index.

b. Herfindahl-Hirschman index.

c. Lerner index and Rothchild index.

d. Lerner index.

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The correct answer is option D: Lerner index

The Lerner Index is a measure of market power in an industry. It measures the price-cost margin which is derived from the difference between the output price of a firm and the marginal cost divided by the output price.

Rothchild index is a measure of the difference between price and marginal cost as a fraction of the product's price. It calculates the percentage markup that a firm can charge over its minimal cost

The Herfindahl Hirschman Index is a measurement used to understand the level of competition that exists within an industry while indicating how the distribution of market share occurs across the companies included in the index.