Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power

  title={Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power},
  author={Nicola Giocoli},
  journal={Review of Industrial Organization},
  • N. Giocoli
  • Published 21 July 2012
  • Economics
  • Review of Industrial Organization
The invention of the price/cost margin (P-MC)/P as an index of market power is usually credited to Lerner (Rev Econ Stud 1(3):157–175, 1934). Landes and Posner (Harv Law Rev 94(5):937–996, 1981) is similarly often considered the main reference for the generalized version of the index in the case of a dominant firm that shares the market with price-taking rivals. From the viewpoint of the history of industrial economics both claims are incorrect. It was not Lerner who invented the price/cost… 

Market power and R&D investment: the case of China

This article presents an in-depth analysis of market power and its impact on firm research and development (R&D) investment in China. Two opposing theories have been proposed in the literature. The

The Lerner index and revenue maximization

ABSTRACT Based on profit-maximizing behaviour, the usual interpretation of the Lerner index is that a zero value reflects competitive behaviour, while a positive value is associated with market

Price Gouging at the Pump? The Lerner Index and the German Fuel Market

Abstract Gasoline prices in Germany fluctuate significantly within one day. Price ranges of 15 euro cent per day are not uncommon. Consumers therefore often perceive that market power is exercised in

Measuring multi-output banks’ market power using a weighted-average Lerner index

Multi-output measures of market power have become increasingly important in banking, since banks have been broadening their business from interest-bearing activities to fee-based activities. For the

The Early Oligopolistic Models: Market Power in the Paretian Tradition

The study of non-competitive markets was a very active field of research in the period between the two World Wars. The chapter focuses on the developments that emerged within the Paretian tradition.

Measuring Multi-Product Banks' Market Power Using the Lerner Index

The aggregate Lerner index is a popular composite measure of multi-product banks’ market power, based on the assumption that banks’ single aggregate output factor is total assets. This study

CEO inside debt, market competition and corporate risk taking

  • S. Sheikh
  • Business, Economics
    International Journal of Managerial Finance
  • 2019
Purpose The purpose of this paper is to investigate the effect of market competition on the relation between CEO inside debt and corporate risk-taking. Design/methodology/approach Ordinary least

Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches

This chapter addresses issues in antitrust economics that related to the exercise of market power by a monopoly or by a dominant firm. We start by presenting the standard textbook treatments of



The Lerner Index of Monopoly Power: Origins and Uses

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


The static equilibrium dominant firm price leadership model is traced to a seminar presentation by Karl Forchheimer in 1906, who seems to have originated the concept of a dominant firm facing

The Concept of Monopoly and the Measurement of Monopoly Power

Monopoly, says the dictionary, is the exclusive right of a person, corporation or state to sell a particular commodity. Economic science, investigating the economic aspects of this legal right, found

Risk, Uncertainty and Profit

In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new

Economics of imperfect competition

When Joan Robinson came to write The Economics of Imperfect Competition (Robinson, 1933a), she also began her long intellectual friendship with Richard Kahn. At much the same time, Kahn was writing

Advanced Industrial Economics

Preface. 1. Introduction:. The Scope of the Field. Theory Versus Empiricism. Barriers to Entry and the Structure--Conduct--Performance. A Decade of High Theory. An Outline of the Book. 2. Foundations

Notes on the Theory of Duopoly

  • G. Stigler
  • Economics
    Journal of Political Economy
  • 1940
T | aHE very magnitude of the literature on the theory of duopoly may be interpreted as indirect evidence of the unsatisfactory state of this theory. Duopoly seems to present one of those problems

Stackelberg on Monopolistic Competition

rT HE analysis of problems of monopolistic competition has reached a stage in which any further progress is seriously hampered by the lack of a systematic consolidation of the many divergent

No History of Ideas, Please, We're Economists: Response

I t is no secret that the study of the history of economic thought is held in low esteem by mainstream economists and sometimes openly disparaged as a type of antiquarianism. There is nothing new in

Italian economic papers

Introduction On the Concept of Taxable Income and a System of Taxation on Consumption Long-term Movements of Discount and Prices Some Notes on an Aspect of the Theory of Fiscal Illusion The