Lerner Index Calculator
Calculate the Lerner Index, a measure of a firm’s market power, which ranges from 0 (perfect competition) to 1 (monopoly).
The price charged for the good or service
The cost to produce one additional unit
Market Power Analysis
Lerner Index (L):
0.00
Markup Percentage:
0%
Market Power Interpretation:
Perfect competition
About the Lerner Index
The Lerner Index (L) is calculated using the formula:
L = (P – MC) / P
Where:
- L = Lerner Index (0 to 1)
- P = Price of the good
- MC = Marginal cost of production
Interpretation Guide
0.00 – 0.20
Highly competitive market
0.21 – 0.40
Moderate competition
0.41 – 0.60
Significant market power
0.61 – 0.80
Strong market power
0.81 – 1.00
Near monopoly power