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American Economic Review: Vol. 101 No. 3 (May 2011)

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The Lerner Index of Monopoly Power: Origins and Uses

Article Citation

Elzinga, Kenneth G., and David E. Mills. 2011. "The Lerner Index of Monopoly Power: Origins and Uses." American Economic Review, 101(3): 558-64.

DOI: 10.1257/aer.101.3.558

Abstract

Abba Lerner's paper in the Review of Economic Studies (1934) is the source of what is now referred to as the Lerner Index of monopoly power. The Lerner Index has become the standard measure of monopoly power and one of the most widely cited indexes in the discipline of economics. This paper traces the origins of the index, sets out its strengths and weaknesses, and examines its role in antitrust enforcement. The Index is a better indicator of a firm's price-setting discretion than its ability to sustain monopoly prices.

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Online Appendix (62.13 KB)

Authors

Elzinga, Kenneth G. (U VA)
Mills, David E. (U VA)

JEL Classifications

C82: Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
N33: Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913


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