HHI Calculator
Calculate Herfindahl-Hirschman Index to measure market concentration and competitiveness
Market Share Data
HHI Analysis Results
Calculation Details
Formula: HHI = Σ(s²) where s is market share percentage
HHI Interpretation Benchmarks
Example: Technology Industry Analysis
Market Scenario
Market Leader Corp: 35%
Major Competitor: 22%
Regional Player: 20%
Mid-Size Company: 10%
Small Business: 8%
Startup Inc: 3%
Others: 2%
Total: 100%
HHI Calculation
HHI = 35² + 22² + 20² + 10² + 8² + 3² + 2²
HHI = 1,225 + 484 + 400 + 100 + 64 + 9 + 4
HHI = 2,286 (Moderately Concentrated)
Merger Impact Analysis
If Major Competitor (22%) merges with Regional Player (20%):
New market share: 42%, HHI = 35² + 42² + 10² + 8² + 3² + 2² = 3,166
HHI increase: 880 points → High concentration, potential antitrust concerns
HHI Scale Reference
Regulatory Guidelines
DOJ/FTC Merger Guidelines
- • HHI < 1,500: Unlikely to challenge
- • HHI 1,500-2,500: Scrutinize if Δ > 100
- • HHI > 2,500: Challenge if Δ > 100-200
European Commission
- • Similar thresholds to US
- • Additional market factors considered
- • Case-by-case analysis
HHI Tips
Market shares must be expressed as percentages
Include all significant market participants
HHI ranges from near 0 to 10,000
Higher values indicate less competition
Consider geographic and product market definitions
Understanding the Herfindahl-Hirschman Index (HHI)
What is the HHI?
The Herfindahl-Hirschman Index (HHI) is a widely used measure of market concentration that indicates the level of competition within an industry. It was developed by economists Albert Hirschman (1945) and later popularized by Orris Herfindahl in the 1950s.
Why is HHI Important?
- •Antitrust enforcement and merger evaluation
- •Market competitiveness assessment
- •Investment and strategic planning decisions
- •Regulatory compliance monitoring
HHI Formula
HHI = Σ(s²)
Sum of squared market shares
- s: Market share of each firm (as percentage)
- Σ: Sum across all firms in the market
- Range: Near 0 (perfect competition) to 10,000 (monopoly)
Example:
Three firms with 50%, 30%, and 20% market shares:
HHI = 50² + 30² + 20² = 2,500 + 900 + 400 = 3,800
Applications and Limitations
Key Applications
- • Merger and acquisition analysis
- • Market structure evaluation
- • Competitive intelligence
- • Industry research and analysis
- • Regulatory policy development
Important Limitations
- • Requires accurate market share data
- • Market definition affects results
- • Doesn't capture market dynamics
- • Geographic scope considerations
- • Barriers to entry not reflected