📊 HHI Calculator (Herfindahl-Hirschman Index Calculator)
Calculate market concentration index
Market Shares (%)
Enter market share percentages for each firm (typically sum to 100%)
How to Use This Calculator
Enter Market Shares
Add each firm's market share as a percentage. You can add multiple firms by clicking "Add Market Share". Market shares typically sum to 100%.
Calculate
Click calculate to see the HHI, which measures market concentration. The calculator squares each market share and sums them.
Review Results
Examine the HHI value and concentration level to understand market structure and competition level.
Interpret Results
Use HHI to assess market concentration: low HHI (competitive), moderate HHI, or high HHI (oligopoly/monopoly).
Formula
Herfindahl-Hirschman Index (HHI):
HHI = Σ (Market Share)²
Sum of squares of all market shares
Range: 0 to 10,000 (0 = perfect competition, 10,000 = monopoly)
Example 1: Competitive Market
4 firms each with 25% market share
HHI: 25² + 25² + 25² + 25² = 625 + 625 + 625 + 625 = 2,500
⚠️ Moderate concentration
Example 2: Oligopoly
Firm A: 40%, Firm B: 30%, Firm C: 20%, Firm D: 10%
HHI: 40² + 30² + 20² + 10² = 1,600 + 900 + 400 + 100 = 3,000
⚠️ High concentration (oligopoly)
About HHI Calculator (Herfindahl-Hirschman Index Calculator)
The HHI (Herfindahl-Hirschman Index) Calculator helps economists, analysts, and antitrust regulators measure market concentration by calculating the sum of squares of market shares. This index ranges from 0 (perfect competition) to 10,000 (monopoly), providing a standardized measure to assess competition levels, evaluate mergers, and understand market structure.
When to Use This Calculator
- Market Analysis: Analyze competition levels and market structure
- Merger Evaluation: Assess antitrust implications of mergers and acquisitions
- Regulatory Compliance: Calculate HHI for regulatory filings and antitrust reviews
- Competitive Assessment: Evaluate competitive dynamics in an industry
- Market Research: Understand market concentration for strategic planning
- Academic Research: Calculate HHI for economic and business research
Why Use Our Calculator?
- ✅ Multiple Firms: Handle any number of firms in the market
- ✅ Quick Calculation: Instantly calculate HHI from market shares
- ✅ Concentration Interpretation: Automatically interprets HHI levels
- ✅ Clear Results: Easy-to-understand HHI and concentration level
- ✅ Free Tool: No cost for essential market analysis
Common Applications
- Antitrust Analysis: Evaluate market concentration for regulatory purposes
- Merger Reviews: Assess potential competitive effects of mergers
- Industry Analysis: Analyze concentration levels across industries
- Strategic Planning: Understand competitive dynamics for business strategy
Tips for Best Results
- Accurate Market Shares: Use accurate market share data from reliable sources
- Include All Major Players: Include all significant market participants for accurate HHI
- Market Definition: Clearly define the relevant market (geographic and product)
- Regular Updates: Recalculate HHI as market shares change
- Compare Over Time: Track HHI trends to identify increasing concentration
Frequently Asked Questions
What does HHI measure?
HHI measures market concentration by summing the squares of all firms' market shares. Higher HHI indicates more concentration (fewer competitors or more unequal shares). Lower HHI indicates more competition. The index ranges from 0 (perfect competition) to 10,000 (single-firm monopoly).
What HHI levels indicate different market structures?
HHI < 1,500 indicates competitive markets. HHI 1,500-2,500 indicates moderate concentration. HHI > 2,500 indicates high concentration (oligopoly). The US Department of Justice uses these thresholds for merger reviews: below 1,500 is unconcentrated, 1,500-2,500 is moderately concentrated, above 2,500 is highly concentrated.
How is HHI used in antitrust analysis?
Regulators use HHI to evaluate mergers. A merger that increases HHI by more than 200 points in a highly concentrated market (HHI > 2,500) may raise antitrust concerns. The DOJ and FTC use HHI thresholds to assess potential competitive harm from mergers.
Why square market shares instead of just summing them?
Squaring gives more weight to larger firms, reflecting their greater market power. For example, one firm with 50% share contributes more to HHI (2,500) than five firms with 10% each (500 total). This better captures the competitive impact of market concentration.
What if market shares don't sum to 100%?
If shares don't sum to 100%, you may have incomplete data or defined the market too narrowly/broadly. The calculator will warn if total exceeds 100%. For accurate HHI, include all significant market participants or clearly define your market scope.
Can HHI be used for international markets?
Yes, HHI can be calculated for any market. However, market definition is crucial - define the geographic and product market clearly. National markets may have different HHI than global markets. Ensure all data is for the same market definition.