hI Dora, i think you aimed at applying the Lerner Index to measure the market power of the firm/industry. If you don't have data related to price and AVC , you might have two options: 1. to derive the price and MC data from the reveue and/ or total cost figures

2. to use other market power measures like the PR model,  HHI, Concentration ratio, topin Q etc.

Thanks

Tes

Thank you very much. I have already estimated HHI. 

Hi Dora Doncheva,

 Generally Market Power can be measured by estimating the following :

1. Concentration ratios are the most common measures of market power

2. Another measure of concentration is the Herfindahl - Hirschman index   (HHI) which is calculated by -summing the squares of the percentage market shares of all participants in the market.

3. Finally you can estimate the Economies of  Scale (Total Cost / Quantity = Average Cost per Unit) also, so that you can understand  that the firm which enjoys the  less  AC over other competitors can enjoy Economies of Scale.  I  think this measure also indirectly assess the market power.

With Best Wishes

 , Dr.L.Krishna Veni, Professor

Siva Sivani Institute of Management,bSecunderabad

Thank you for your answer.

Dear Dora Doncheva

Greetings,

Yes , you can used HHI measure , Tobin q.

Best Regards, 

Hi Dora,

the most appropriate measure of a firm’s market power is the Lerner index but marginal costs are not directly observable, however, and the mark-up can be  derived from accounting data, a procedure which has a tradition in the empirical literature (the procedure suggested by Domowitz, Hubbard and Petersen 1986).

Thank you very much