The Lerner Index of Monopoly Power: Origins and Uses
American Economic Review
vol. 101,
no. 3, May 2011
(pp. 558-64)
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.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.101.3.558Additional Materials
JEL Classification
- 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