Lerner Index Calculator
FinanceCalculate the Lerner Index to measure the market power of a firm based on the gap between price and marginal cost.
Lerner Index
Price minus marginal cost, divided by price
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Frequently Asked Questions
What does a Lerner Index of 0 mean?
A Lerner Index of 0 means price equals marginal cost, the outcome expected in a perfectly competitive market with no pricing power.
What does a higher Lerner Index indicate?
A higher Lerner Index, closer to 1, indicates greater market power, since the firm can price well above its marginal cost of production.
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