Measures for assessing monopoly powers of the firms.

 Monopoly power is the corporate freedom to influence the market, especially through overpricing and underproduction where the harmonious price-production relationship in a perfectly competitive structure is disturbed. Admittedly, the evaluation of this power is notably important for one to grasp the share of the market the firm has, and perhaps reflect on the firm's the threat of competition if consumer love was eliminated. A very often cited aspect of monopoly power is market share, which is the proportion of a firm’s sales being sold in the market. A large market share generally indicates a firm with powerful monopoly. For example, a company with a market share of over 50% is usually seen as a company with great market control. But, the market share cannot be taken as a definitive indicator because it does not take into account such elements as market dynamics, potential competition, or entry barriers.

Another measure that is equally important is the Herfindahl-Hirschman Index (HHI), which is a more all-inclusive measure of market concentration. The HHI is calculated as the sum of the squares of the market shares of all firms in the market. Higher HHI values mean the market is more concentrated while the more concentrated market has the corresponding higher monopoly power. For instance, HHI above 2,500 usually indicates sell-forsaking market and perhaps one firm as a monopolist. The HHI is designed to give the relative size distribution of firms in the market and thus is useful in evaluating the market as a whole.

Moreover, price-cost margins or Lerner Index could also give us a better idea of the degree of monopoly power in a certain market. Lerner Index is the percentage of the price over the marginal cost. A greater index shows the ability of the firm to increase the price over the marginal cost to a much greater extent, i.e., it signifies greater market power. This index, therefore, captures the link between the firm’s pricing tactics and its market power, thus revealing the potential the firm has to profit from its market position.

The degree of product differentiation and price elasticity are other ways to measure it. Companies with unique products or least elastic demand curves have greater monopoly power, because when consumers have fewer options to pick from and are less influenced by price alterations. Product prices seem to have been controlled by the firm, although it is not clear why they are able to do this indefinitely and without anyone else being really affected by it.

Another point is barriers to entry count for a large part of monopoly power. Obstacles, such as, initial heavy spending, many restrictions, and the idea of having a strong brand affect, make only the firms that are currently in the market profitable and powerful. Last but not least, profitability indicators may hint at monopoly power, because if a company manages to get from constantly high profits it may be an indicator of the absence of any competitor and the company's use of its dominant position to the fullest.