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Measuring Market Power When The Firm Has Power In The Input And Output Markets, Keith N. Hylton, Mark Lasser
Measuring Market Power When The Firm Has Power In The Input And Output Markets, Keith N. Hylton, Mark Lasser
Faculty Scholarship
We examine the problem of measuring market power when the firm has monopoly power in the output market and monopsony power in the input market - a case we refer to as 'dual-market' power. We show how the Lerner index, which measures the mark-up over the marginal cost, can be modified to reflect the firm's ability to set price above the competitive level.