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Lerner Index. Estimation and the Impact of its Market Structure Determinants


  • Alejandro Castañeda Sabido

    () (El Colegio de México)


Using the reasoning that assumes that a pro-cyclical Solow residual is an indication of the presence of market power, the paper estimates the Lerner index. At the same time in which we estimate the Lerner index, we measure the impact of industry structure variables (concentration and imports) on this index. Because we have panel data, we also allow for a change in the impact of these variables across time. For the whole manufacturing sector, we find that concentration and imports have a differing impact on the Lerner index across the business cycle. We find evidence that shows that the Lerner index behaves anticyclically. And we also make the analysis by type of good (durables and non-durables) and find differing impacts of concentration and imports by type of good.

Suggested Citation

  • Alejandro Castañeda Sabido, 2006. "Lerner Index. Estimation and the Impact of its Market Structure Determinants," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 165-197, July-Dece.
  • Handle: RePEc:emc:ecomex:v:15:y:2006:i:2:p:165-197

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    Lerner index estimation; concentration; import-penetration; pro-cyclical Solow residual;

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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