FINANCIAL & TAX CALCULATORS
Herfindahl-Hirschman Index (HHI) Calculator
Calculate the Herfindahl-Hirschman Index to measure market concentration.
What is the Herfindahl-Hirschman Index (HHI) Calculator & How does it work?
The Herfindahl-Hirschman Index (HHI) is a measure of market concentration. It is calculated by summing the squares of the market shares of all firms in an industry. The HHI ranges from 0 to 10,000, where a higher value indicates greater market concentration.The HHI is used by antitrust authorities to determine whether a market is competitive or if there are barriers to entry. A common threshold for monopolization is an HHI above 2,500.
HHI = sum (s_i^2)
si = market share of firm i
Parameters
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Frequently Asked Questions
What is the Herfindahl-Hirschman Index?
The HHI is a measure of market concentration calculated by summing the squares of the market shares of all firms in an industry.
How do I calculate the HHI?
To calculate the HHI, square each firm’s market share and then sum these squared values.
What does a high HHI value indicate?
A high HHI value indicates greater market concentration, suggesting fewer competitors with larger shares.
When is the HHI used?
The HHI is used by antitrust authorities to determine if a market is competitive or if there are barriers to entry.
What is the threshold for monopolization according to the HHI?
A common threshold for monopolization is an HHI above 2,500.
Can the HHI be used for any industry?
Yes, the HHI can be used for any industry to assess market concentration.
How does the HHI differ from other measures of market concentration?
The HHI is unique in that it provides a single numerical value representing market concentration, making it easier to compare across different industries.
Results are for informational purposes only and do not constitute professional advice.