topic 8: Antitrust—The Value of Competition

Question 1

Equals 0 under perfect competition and approaches 1 for large
price markups

Answer 1

Lerner Index = (P−MC)/P

Question 2

Share of the market held by the X largest
firms.

Answer 2

Concentration ratios: S

Question 3

is defined as the sum of
squared market shares s (in %) for all n active firms in an industry:

Answer 3

Herfindahl-Hirschman Index (HHI)

Question 4

moderately concentrated
if HHI > ________ and
highly concentrated if HHI > __________

Answer 4

1500; 2500