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Open Access. Powered by Scholars. Published by Universities.®

1998

Law and Economics

Boston University School of Law

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Measuring Market Power When The Firm Has Power In The Input And Output Markets, Keith N. Hylton, Mark Lasser Mar 1998

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.