The Market Power Measurement of Firms within the European Union

Abstract

Market power is important because it may lead to an inefficient and bias appropriation, meanwhile worsening productive efficiency. I have used the most important indicators for measuring market power and market concentration in this paper – the Lerner index, price dispersal and the Herfindahl-Hirschman index (HHI). With the help of the indexes and of the available statistics I have managed to analyze the market power held by European firms and the activity sectors that have the highest economical concentration. Moreover, by using data from other countries (USA and Japan), I was able to make a comparison between the level of current prices, and reach the conclusion that, although the enforcement of the single market has had a strong and immediate effect on price dispersal, there is still room left for future reductions, along with market integration growth and the growth of the competitive pressure.

Keywords

• market power
• market concentration
• dispersal.