The SCP school prefers to use accounting data for the industry ‘‘average’’

profit rate to measure market power. This article emphasizes that

overreliance on average profit across all firms to infer excess profit might
lead to incorrect inferences regarding market power. Based on the
conventional insights of Mill, Fawcett, Hobson, and Friedman, this article
recommends using the profit rate of the marginal firm (the least efficient
firm) as an indicator to measure market power, rather than the industry
average profit rate.