What is HHI used for?
Regulators (like the DOJ) use it to evaluate mergers. If a merger increases HHI significantly in a concentrated market, it may be blocked.
Calculator
Enter your values
Company A
Company B
Company C
Company D
Company E
Analysis
Interpretation of the current calculator output
Enter values to see detailed analysis and insights.
How to Use
Step-by-step instructions
- 1Enter the market share percentage for each major company
- 2Add or remove companies as needed
- 3Ensure total market share sums to 100% for accuracy
- 4Review the HHI score and concentration level
HHI Formula
Sum of the squares of the market shares of the firms within the industry. Ranges from near 0 to 10,000.
HHI = Σ (Market Share %²)Variables:
sMarket share of each firm (as a whole number, e.g., 30 for 30%)nNumber of firms in the marketExample
Market Analysis
Inputs:
Firm A:30%
Firm B:30%
Firm C:20%
Firm D:20%
Steps:
- 1.HHI = 30² + 30² + 20² + 20²
- 2.HHI = 900 + 900 + 400 + 400
- 3.HHI = 2,600
Result:
2,600 (Highly Concentrated)
Frequently Asked Questions
What are the thresholds?
Below 1,500: Unconcentrated. 1,500 to 2,500: Moderately Concentrated. Above 2,500: Highly Concentrated.
Why square the shares?
Squaring gives more weight to firms with larger market shares, reflecting their greater impact on competition.