Asian Social Science; Vol. 11, No. 21; 2015 ISSN 1911-2017 E-ISSN 1911-2025 Published by Canadian Center of Science and Education 306 Measuring Market Structures in the Dairy Market in the Czech Republic Ekaterina Mikhalkina 1 , Mansoor Maitah 1 & Karel Šrédl 1 1 Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic Correspondence: Mansoor Maitah, Faculty of Economics and Management, Czech University of Life Sciences, Kamýcká 129, 165 00, Prague, Czech Republic. Tel: 42-022-438-2139. E-mail: maitah@pef.czu.cz Received: May 9, 2015 Accepted: May 21, 2015 Online Published: July 6, 2015 doi:10.5539/ass.v11n21p306 URL: http://dx.doi.org/10.5539/ass.v11n21p306 Abstract The aim of the paper is to illustrate the existing measures of measuring market structures and demonstrate the use of these measures for the selected industry. For the analysis was taken the dairy market in the Czech Republic in the year 2012. This market includes four main stages: milk production; processing and pasteurization of milk; wholesale and retail of milk. The outcome of the analysis determines concentration ratios and types of competition at each stage of the dairy market. Calculations are demonstrated under the Czech antitrust law which operates under the Act no. 143/2001 Coll., On Protection of Competition. Calculations presented in the article can be used by antitrust authorities for evaluating types of competition and concentration ratios within a market. Among the main priorities of the calculations performed in the paper is its simplicity that does not require a large collection of data and complex mathematical calculations. Keywords: concentration ratio, Herfindahl-Hirshman index, Lerner index, market power, market share, oligopoly 1. Introduction The article describes indicators for measuring market structures that internationally used by competition authorities in the fight against market failures, mainly in the fight against uncompetitive markets. Imperfect competition may harm consumers, discriminate one producer over another and thus is ineffective and undesirable in each market. Indicators of market concentrations are used by antitrust authorities in identifying the possibility of breaking antitrust laws. Indicators of market concentrations are easily measurable what helps in prediction of possible abuse of a dominant position in a market. Thus, these indicators are an important part of the analysis and examination of the market. Markets with high concentration ratios are suggested to be imperfect. Markets with low concentration ratios are suggested to be perfectly competitive and hence, the intervention of antitrust authorities is futile. Markets with high concentration ratios do not necessary mean that these markets are inefficient, but abuse of a dominant position is easier exactly at these types of markets. If antitrust authorities find a high market concentration, further investigation and exploration should be started. For example, antitrust authorities should identificate deeper each company in the market; check its financial documentation, suppliers and customers, evaluate firm’s market prices and quantites produced using further methods of financial and strategic analysis. 2. Method Market power identifies the “degree of a control that has a single company or group of companies over the decision about output and prices in a given market” (Samuelson, 2013). Among the most commonly used indicators for measuring market power are concentration ratios. Because an oligopoly consists of a small amount of larger firms, which produce a larger portion of output in the sector, production and thus revenues are highly concentrated. For example, studies for the oligopolistic competition have prooved that in the United States of America there is more than 75 % of the total market is divided among the 10 strongest firms. In some oligopolistic structures just two or four strongest firms hold 90 % of the total market (U.S. Census Bureau, 2009). The aim of the paper is to illustrate the existing measures of market structures and illustrate the use of these indicators for the selected sectors. For the analysis was taken the dairy market in the Czech Republic for the year