Herfindahl–Hirschman index - Wikiwand

The Herfindahl index (also known as Herfindahl–Hirschman Index, HHI, or sometimes HHI-score) is a measure of the size of firms in relation to the industry they are in and is an indicator of the amount of competition among them. Named after economists Orris C. Herfindahl and Albert O. Hirschman, it is an economic concept widely applied in competition law, antitrust regulation,[1] and technology management.[2] HHI has continued to be used by antitrust authorities, primarily to evaluate and understand how mergers will affect their associated markets.[3] HHI is calculated by squaring the market share of each competing firm in the industry and then summing the resulting numbers[4] (sometimes limited to the 50 largest firms[5][6]). The result is proportional to the average market share, weighted by market share. As such, it can range from 0 to 1.0, moving from a huge number of very small firms to a single monopolistic producer. Increases in the HHI generally indicate a decrease in competitio

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