Market segmentation index

This Index, is a comparative measure of the degree of monopoly power in two distinctive markets for products that have the same marginal costs.

If C > 1 then a monopolist country has a higher degree of monopoly power in segment Mp than segment Ms and therefore this country has a greater incentive to specialize in Mp.

If C < 1 then a monopolist country has a lower degree of monopoly power in segment Mp than segment Ms and therefore this country has a greater incentive to specialize in Ms.

If C ≈ 1 then a monopolist country experiences no difference in the degree of monopoly power between segment Mp and segment Ms and therefore this country has no monopolistic incentive to specialize in either market.

This result confirms the validity of the market segmentation index, which is a comparative measure of the degree of monopoly power in two distinctive markets for products that have the same marginal costs.